[Senate Hearing 108-992]
[From the U.S. Government Publishing Office]



                                                    S. Hrg. 108-992

                   THE CASE FOR CLIMATE CHANGE ACTION

====================================================================

                                HEARING

                               before the

                         COMMITTEE ON COMMERCE,
                         
                      SCIENCE, AND TRANSPORTATION
                      
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 1, 2003

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation


                                     ______

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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                     JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska                  ERNEST F. HOLLINGS, South 
CONRAD BURNS, Montana                    Carolina, Ranking
TRENT LOTT, Mississippi              DANIEL K. INOUYE, Hawaii
KAY BAILEY HUTCHISON, Texas          JOHN D. ROCKEFELLER IV, West 
OLYMPIA J. SNOWE, Maine                  Virginia
SAM BROWNBACK, Kansas                JOHN F. KERRY, Massachusetts
GORDON H. SMITH, Oregon              JOHN B. BREAUX, Louisiana
PETER G. FITZGERALD, Illinois        BYRON L. DORGAN, North Dakota
JOHN ENSIGN, Nevada                  RON WYDEN, Oregon
GEORGE ALLEN, Virginia               BARBARA BOXER, California
JOHN E. SUNUNU, New Hampshire        BILL NELSON, Florida
                                     MARIA CANTWELL, Washington
                                     FRANK R. LAUTENBERG, New Jersey
      Jeanne Bumpus, Republican Staff Director and General Counsel
             Robert W. Chamberlin, Republican Chief Counsel
      Kevin D. Kayes, Democratic Staff Director and Chief Counsel
                Gregg Elias, Democratic General Counsel
                
                
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on October 1, 2003..................................     1
Statement of Senator McCain......................................     1
Statement of Senator Lautenberg..................................     8
Statement of Senator Nelson......................................    45

                               Witnesses

Busalacchi, Jr., Ph.D., Antonio J., Chairman, Climate Research 
  Committee, National Academy of Sciences, and Director, Earth 
  System Science Interdisciplinary Center (ESSIC), University of 
  Maryland.......................................................    10
    Prepared statement...........................................    12
Delbeke, Jos, Director, Environment DG, European Commission, 
  Brussels.......................................................     2
    Prepared statement...........................................     5
Gorman, Paul, Executive Director, National Religious Partnership 
  for the Environment............................................    55
    Prepared statement...........................................    57
Podell, Ethan J., President, Orbis Energy Advisors Inc...........    59
    Article dated October 1, 2003 from the Natural Resources 
      Defense Council entitled ``Analysis of the McCain Lieberman 
      Climate Stewardship Act (S. 139)''.........................    61
    Prepared statement...........................................    65
Schneider, Stephen H., Professor, Department of Biological 
  Sciences; Co-Director, Center for Environmental Science and 
  Policy, Stanford University....................................    22
    Prepared statement...........................................    25
Stephenson, John B., Director, Natural Resources and Environment, 
  United States General Accounting Office........................    68
    Prepared statement...........................................    71
Walker, Christopher T., Managing Director, Greenhouse Gas Risk 
  Solutions on behalf of Swiss Re................................    77
    Prepared statement...........................................    78
Wigley, Tom M.L., Senior Scientist, National Center for 
  Atmospheric Research...........................................    14
    Prepared statement...........................................    16

                                Appendix

Kerry, Hon. John F., U.S. Senator from Massachusetts, prepared 
  statement......................................................    89
    Letter dated October 1, 2003 from U.S. Scientists to Senators 
      Frist and Daschle, U.S. Senate.............................    91
Response to written questions submitted to Antonio J. Busalacchi, 
  Jr., Ph.D. by:
    Hon. Ernest F. Hollings......................................   123
    Hon. John F. Kerry...........................................   123
    Hon. John McCain.............................................   122
Response to written questions submitted to Dr. Tom M.L. Wigley 
  by:
    Hon. Ernest F. Hollings......................................   124
    Hon. John F. Kerry...........................................   126
Response to written questions submitted by Hon. John F. Kerry to:
    Jos Delbeke..................................................   127
    Ethan J. Podell..............................................   133
    Dr. Stephen H. Schneider.....................................   128
    John B. Stephenson...........................................   134
    Christopher Walker...........................................   136

 
                   THE CASE FOR CLIMATE CHANGE ACTION

                              ----------                              


                       WEDNESDAY, OCTOBER 1, 2003

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:30 a.m. in room 
SR-253, Russell Senate Office Building, Hon. John McCain, 
Chairman of the Committee, presiding.

            OPENING STATEMENT OF HON. JOHN McCAIN, 
                   U.S. SENATOR FROM ARIZONA

    The Chairman. Welcome. Today's hearing will be the third in 
a series of hearings this Committee has held this year on the 
very critical topic of global climate change, an issue of 
worldwide importance.
    The National Academy of Sciences has reported that 
``Greenhouse gases are accumulating in the Earth's atmosphere 
as a result of human activities, causing surface air 
temperatures and subsurface ocean temperatures to rise. 
Temperatures are, in fact, rising. The changes observed over 
the last several decades are likely mostly due to human 
activities, but we cannot rule out that some significant part 
of these changes is also a reflection of natural variability.''
    While the National Academy of Sciences statement allows 
that factors other than human activity may affect temperatures, 
there is broad scientific consensus that global warming is 
occurring, that human activity is causing it, and that its 
consequences are extremely serious. While these consequences 
are alarming to think about, and politicians are naturally 
inclined to postpone tough choices, no excuse for inaction on 
this issue is acceptable.
    While Congress and the Administration continue to expend 
their efforts on justifying our inaction, many countries have 
already recognized the scientific consensus, some states have 
joined together to address the problems, and domestic 
businesses are taking their own actions to respond to global 
climate change.
    Earlier this year, Senator Lieberman and I introduced S. 
139, the Climate Stewardship Act of 2003, which proposes to 
establish a mandatory carbon dioxide reduction program along 
with an emissions trading system. We believe that a market-
based approach, combined with mandatory caps and Federal 
oversight, offers the best way for the Nation to respond to a 
growing global environmental threat.
    We requested the Energy Information Administration and the 
Environmental Protection Agency to conduct analyses of our 
climate change proposal. While EIA responded to our request, 
EPA did not. Based on the EIA's analysis, as well as an 
independent analysis performed by the Massachusetts Institute 
of Technology and the Tellus Institute, we intend to offer a 
modified approach when the Senate finally debates our climate 
change legislation, which we expect to occur later this month.
    Specifically, Senator Lieberman and I will offer a 
substitute amendment, which will, among other things, eliminate 
the second target date for reductions of greenhouse gases. It 
also would require the effected sectors to reduce their 
greenhouse emissions to the year 2000 levels by the year 2010, 
which is approximately 1.5 percent below today's levels. The 
bill, as introduced, would have required additional reductions 
by the year 2016.
    By modifying the bill, we expect to build additional 
momentum for the measure in the Senate. We've insisted on and 
secured an agreement for a vote on the measure, a vote that 
must take place in order for constituents to know where their 
Senators stand on one of the most important environmental 
issues of our time.
    We have a number of witnesses with us today to help further 
inform the Committee about the results of leading-edge 
scientific research, discuss actions being taken by industry in 
response to this growing worldwide concern, and public reaction 
to recent environmental reports on climate change. We're also 
joined today by a representative from the European Union to 
discuss the EU's efforts to develop a ``cap-and-trade system.''
    I welcome our witnesses here today and look forward to 
their testimony.
    First, I'd like to ask Mr. Jos Delbeke--he's the Director 
for Air Quality, Climate Change, and Biotechnology, the 
Delegation of the European Commission, the European Union--to 
come forward.
    Welcome, Mr. Delbeke, and thank you for giving us your 
perspective and giving your responsibilities on this issue. 
Thank you. And I understand that your testimony will be in the 
form of a statement of position. Just want to make that clear 
for the record.
    Thank you, sir. Please proceed.

      STATEMENT OF JOS DELBEKE, DIRECTOR, ENVIRONMENT DG, 
                 EUROPEAN COMMISSION, BRUSSELS

    Mr. Delbeke. Thank you very much, Mr. Chairman.
    I'm grateful for this opportunity to give input to your 
meeting today. And there is a particular reason for that. The 
particular reason is that Europe is now embarking on the cap-
and-trade regime, and will have been largely inspired by your 
successful experience on sulphur allowance trading. So we 
learned a lot from you, and we hope to continue that in the 
future.
    Mr. Chairman, I also prepared a written statement, and I 
would like to ask you to incorporate it into the record of this 
hearing.
    The Chairman. Without objection.
    Mr. Delbeke. I will deal with two major points, a few words 
on our climate change policy in Europe, in general, and then 
come to the cap-and-trade system and the specificities of that.
    As you know, Europe is fully committed to the multilateral 
process, to the U.N. Climate Change Convention, and to the 
Kyoto Protocol. And the EU ratified, together with all the 
member states already, in May 2002, the Kyoto Protocol. We are 
already implementing the commitments in view of having a good 
start and everything in place as of the first of January of 
2008.
    The target of the EU is minus 98 percent at the 1990 level. 
Today, we are at minus 2.3. A major part of that reduction 
comes thanks to policies and measures in the fields of energy 
and transport. A minor part of that comes thanks to the 
restructuring of the economy following the German 
reunification. Recently, however, our emissions of greenhouse 
gases are up again, and so we fully realize that we need 
reinforcement of our policies we have already in place and new 
ones to be developed.
    For that reason, we developed a European Climate Change 
Program in which we involved all stakeholders and which gave 
also a new dimension in our environmental policy at large in 
Europe. And the new dimension is that we are very determined to 
go for low-cost measures, and very determined to develop more 
market-based instruments in our policies.
    While we do that, and while we fully realize how costly 
climate policy can be, when we call for low-cost measures, we 
have calculated for Europe that we can keep down costs to below 
.1 percent of GDP in 2012.
    What kind of measures have we developed already? We are 
doing a lot in the field of renewable energy. We double our 
share by 2010. We do a lot of biofuels and transport and 
cogeneration of heat and power, on energy efficiency of 
buildings and passenger cars, on the emissions of fluorinated 
gases, including mobile air conditioning, emitting emissions 
from landfills and so on.
    Important to know is that also in the field of research we 
are fully committed to new breakthroughs that may happen in the 
field of hydrogen and carbon sequestration, and we are happy to 
cooperate with your country in this respect.
    Let's turn now to the EU's allowance trading scheme, the 
cap-and-trade system, which is really the pillar of our new 
climate policy.
    We have finalized our legislation, in July 2003--that means 
a couple of months ago--and important to note is that we had 
unanimity on that bill. We call it the Directive in Europe in 
the Council of Ministers.
    As of the first of January of 2005, that bill would allow 
us to install the largest multi-country cap-and-trade scheme in 
the world, because it will apply to the 15 member states of the 
EU, 15 member states that we have today, plus the 10 new 
acceding member states, plus probably Norway and Iceland, with 
which we have cooperation agreements in the field of energy and 
transport.
    This legislation implements our obligations that we have 
taken on under the Kyoto Protocol. And important is that it 
goes a step further than what we have undertaken in Kyoto, 
namely that our trading obligations are translated up to 
obligations for each company covered by the scheme. It's a 
mandatory scheme for all major companies from the power sector 
and energy-intensive sectors, such as steel, oil refineries, 
cement, lime, glass, pulp and paper, et cetera. And we count we 
have more or less 10,000 companies in the scheme. That would 
cover up to 40 percent of Europe's greenhouse gas emissions, 
and cover plus/minus half of its GDP.
    The scheme, Mr. Chairman, is mandatory. We have a lot of 
experience with voluntary schemes, but those schemes did not 
deliver enough results. So we thought we could establish a 
scheme that is mandatory and, if we do it well, make it much 
simpler to implement. So that's why we have a strict compliance 
regime incorporated into the bill that would create automatic 
financial sanctions for companies not fulfilling their 
obligations, up to 100 euros per ton of CO2 under 
the period under Kyoto.
    We would start, as I said, in 2005. That means that we 
would have a learning-by-doing phase before the Kyoto period 
starts, because, as I indicated, this is a very new instrument 
that we learned from you, Mr. Chairman, in the United States, 
and there is a lot to learn for our European companies in that. 
So we hope to be completely ready to have the implementation 
scheme compatible with Kyoto as of January 1, 2008.
    It starts with CO2 only, and not the five other 
gases which are mentioned in the Kyoto Protocol. But we have 
foreseen possibilities to gradually extend the regime, as you 
have also been considering that, if I understand it well, under 
the sulphur-allowance scheme.
    The allocation that we are undertaking is free of charge, 
but there is a possibility for member states to auction a 
percentage of the allowances--namely, up to 5 percent. 
Important to know is that the member states are responsible for 
allocation according to very clear criteria incorporated into 
the directive. Member states will then have to submit their 
allocation plans to the Commission, and the Commission will 
scrutinize them before the system starts. The Commission 
actually, to facilitate that process, is now drafting 
guidelines to be as clear as possible about what the Commission 
has in mind and what kind of precise rules are going to be 
followed.
    A final word, Mr. Chairman. The EU's scheme is not a closed 
scheme. I know that some have said the EU is now establishing 
its scheme on its own. That's true, but it is not closed. It 
has two important provisions to make bilateral agreements with 
states who have ratified the Kyoto Protocol so as to recognize 
each other's company-based emissions trading schemes.
    The second possibility is that we have joint implementation 
and clean development mechanism projects under the Kyoto 
Protocol that may bring in credits into Europe's scheme, and 
also that is, in principle, allowed. We are elaborating, 
however, the modalities of how to do that.
    So we have learned that, in particular, global companies in 
the sectors I mentioned are very much interested into these 
modalities, because they see the European scheme as a start for 
what they would like to see one day as a global trading scheme 
that is company-based.
    As a conclusion, Mr. Chairman, the EU is going, and is 
showing, I hope, that it is already implementing all provisions 
of the Kyoto Protocol. And I stress ``all,'' because emissions 
trading in Kyoto was not the favorite subject of the Europeans 
at that time. So we go ahead with that, and, indeed, we are 
convinced that such market-based mechanisms are very much 
capable of keeping down costs to companies and to the economy.
    Our legislation is completed, so we are now implementing. 
And the public sector is preparing for the allocation plans, 
for other modalities that have to be sorted out. The private 
sector is already preparing, because thousands of companies and 
businesses and brokers are now elaborating their business plans 
in view of January 1, 2005.
    And the European Union, let me repeat that, looks forward 
to open its schemes to other major players in the world.
    Thank you very much, Mr. Chairman.
    [The prepared statement of Mr. Delbeke follows:]

     Prepared Statement of Jos Delbeke, Director, Environment DG, 
                     European Commission, Brussels
           Climate Change: How the European Union Implements 
                          the Kyoto commitment
    Mr. Chairman and members of the Committee, I am grateful for the 
opportunity to provide input to this meeting today.
    I am a Director at the European Commission in Brussels, the 
executive arm of the European Union.
    In July 2003, the Council of Ministers of the European Union 
adopted with unanimity a Directive (bill) to introduce a 
CO2 cap-and-trade scheme as of 2005. It constitutes the 
legal base for the largest multi-country cap-and-trade scheme 
implemented in the world. Its scope is wide as it will cover close to 
40 percent of the EU's greenhouse gas emissions, mainly from power 
generators and large industries.
    The EU has been inspired by the positive experience in your country 
the Sulphur Allowance Trading scheme based on Title IV of the 1990 
Clean Air Act Amendments. It is therefore a special pleasure to be 
given the opportunity to provide input to a process in which the United 
States Congress may again lend support to a market-based instrument to 
tackle the issue of global climate change.
    Before turning to the EU allowance trading scheme in more detail 
let me however provide you with the bigger picture of Europe's Climate 
Change policy.
    The European Union is fully committed to the multilateral process 
to combat global climate change. It has ratified the Kyoto Protocol in 
May 2002 and is now in the midst of the implementation process.
    As part of the European Climate Change Program, and in addition to 
the EU allowance trading scheme, the following initiatives are underway 
to:

   increase the share of renewables in the EU's electricity 
        generation from 14 to 22 percent in 2010 (emission reduction 
        potential 100 to 125 Mt CO2eq.)

   promote high quality co-generation of power and heat (65 
        MtCO2eq.)

   improve the energy performance of buildings (35-45 Mt 
        CO2eq.)

   improve energy efficiency and energy demand management

   reduce the average CO2 emission of a new car by 
        25 percent in 2008/2009, with respect to 1995, (75-SOMt 
        CO2eq.).

   increase the share of bio-fuels in the road transport sector 
        to 5.75 percent (35-40 MtCO2eq.)

   reduce the emission of fluorinated gases, including a 
        gradual phaseout of certain fluorinated gases in mobile air 
        conditioning systems. (23 MtCO2eq.)

   reduce methane emissions from landfills (41 Mt 
        CO2eq.)

    Except for the voluntary commitment of the automotive industry, all 
of these initiatives are being implemented through binding EU 
legislation.
    The EU also values and participates in initiatives, including the 
development of hydrogen technologies and geological carbon 
sequestration, to accelerate the introduction of technologies necessary 
to combat climate change over the next decades.
    The European Union has to meet its 8 percent reduction target under 
the Kyoto Protocol, equivalent to annual cuts of some 336 Mt 
CO2eq. The latest figures available indicate that the 
European Union (EU-15) has reduced total greenhouse gas emissions by 
2.3 percent since 1990. The major part of this reduction is due to 
policies and measures targeted at reducing greenhouse gas emissions, 
while a minor part was due to a one off reduction resulting from the 
economic restructuring following German reunification. Recently, 
emissions have been increasing slightly again and this underlines the 
need to continue our efforts and further reinforce existing policies.
    Since 2000, the European Climate Change Program has been in place 
to identify, analyse and prepare such policies and measures in all 
major sectors, in particular emissions trading, energy, transport, 
agriculture & forestry, and research. Stakeholder consultation, 
involving EU Member States, businesses, experts and NGOs, is viewed as 
essential for the success of the European Climate Change Program. The 
backdrop of an internationally agreed and legally binding target has 
helped considerably to establish the Program as an ambitious force for 
policy and technological innovation.
    The overall conclusion of the European Climate Change Program is 
that there are ample low-cost reduction measures--that is, below 20 
 per tonne of CO2eq--to meet our Kyoto 
commitments. The total estimated cost of Kyoto compliance of less than 
0.1 percent of GDP represents only a small fraction of total economic 
output in the EU. No indications were found that the standard of living 
of EU citizens would be hampered.
    The EU allowance trading scheme is the major cornerstone of our 
Climate Change Program and will play a crucial role in the EU's 
implementation strategy for the Kyoto Protocol. As the legislation has 
been adopted, the EU allowance trading scheme will be up and running in 
25 countries across Europe as of 1 January 2005. This will be ``the 
onset of the EU carbon economy'', as a leading European Parliamentarian 
has referred to it. It also marks a major change in EU environmental 
policy in general, showing far greater reliance on market-based 
instruments because of their attractiveness in terms of cost-
effectiveness.
    Let me provide you with the overall picture of the EU scheme. It 
will be implemented in multi-annual phases, with the first phase 
running from 2005 to 2007 and the second (in parallel to the Kyoto 
Protocol) from 2008 to 2012. It will cover over 10,000 plants in 
electricity and energy-intensive industry. Initially the coverage will 
be limited to carbon dioxide emissions. Nevertheless, the scheme will 
encompass more than a third of total EU greenhouse gas emissions and 
close to half of EU CO2 output. Just as the Congress is 
considering expanding the SO2 cap-and-trade program in the 
U.S. to cover other pollutants, we intend to extend the coverage of the 
EU scheme over time. We have, however, not made concrete decisions yet 
as to which sectors and gases will come in at what stage.
    Allowances will mainly be allocated free of charge, although Member 
States may auction a small percentage of allowances if they wish. The 
number and methods for allocating allowances are determined in periodic 
allocation plans at the Member State level. For companies failing to 
deliver a sufficient number of allowances, financial sanctions of 
40 per ton of CO2 (i.e., about 147 
per ton of carbon) and 100 per ton of CO2 (i.e., 
about 367 per ton of carbon) will apply automatically. The 
experience of the Sulphur Allowance scheme demonstrates the importance 
of a robust enforcement regime for the environmental and economic 
success of a program.
    Finally, and very importantly, the EU scheme is not a closed 
scheme. It has inbuilt provisions to create links to the outside world. 
Firstly, the EU may conclude bilateral agreements for mutual 
recognition of greenhouse gas allowances with countries running similar 
trading schemes and having ratified the Kyoto Protocol. This allows to 
extend the benefits of trading to other jurisdictions. It is an open 
invitation to countries around the world to cooperate with Europe in 
the multilateral effort to combat climate change. Contacts are already 
developing with several OECD countries.
    Secondly, the Commission has initiated an additional legislative 
process to create a link to the Kyoto Protocol's project-based 
mechanisms--``Joint Implementation'' and the ``Clean Development 
Mechanism''. This initiative aims to allow companies to use credits 
from these mechanisms for compliance. Details of this link will be 
discussed and decided in the legislative institutions in the months to 
come.
    The EU allowance trading scheme, with its possibility of linking 
with schemes in other jurisdictions, is the way in which the EU 
promotes the vision of an international emission trading scheme in 
greenhouse gases. Such an international scheme would prove highly 
beneficial for globally active multinationals of which there are many 
in Europe as well as the United States.
    The legal foundation having been set, Europe is now preparing for 
the launch date of the scheme on 1 January 2005. Member States are now 
drafting national implementation laws (a necessary step for any EU 
Directive). Member States will very soon elaborate first drafts of 
their national allocation plans and consult with industry, NGOs and 
civil society. Before the end of the year, the Commission will issue 
guidance on the implementation of the common allocation criteria agreed 
in the Directive. And the Commission will scrutinize the national 
allocation plans which are to be submitted to Brussels by the end of 
March 2004. Common guidelines for monitoring and reporting of emissions 
by companies at European level will be agreed this fall. And we work on 
the legal framework and the development of electronic allowance 
registries.
    In parallel to the preparations being made in the public sector, 
thousands of businesses have started preparing their compliance 
strategies in the allowance market and are assessing how to benefit 
from the economic opportunities the program will offer.
    In conclusion, Europe is fully committed and works with priority to 
respect the multilateral commitment it has taken on with respect to 
climate change. In doing so, we increasingly rely on market-based 
instruments such as the implementation of the world's largest multi-
country cap-and-trade scheme. The EU looks forward to many countries 
joining us in this journey.

    The Chairman. Thank you very much, sir.
    You mention in your statement that the estimated cost of 
Kyoto compliance is less than 0.1 percent of GDP. How does that 
fit in with estimates from here in the United States that if 
the United States were involved in a similar program, that it 
would be a huge and devastating impact on our economy? I don't 
quite understand the contradiction there.
    Mr. Delbeke. Well, Mr. Chairman, when we embarked on this 
exercise, we were asked to do that exactly for that reason, 
because we were told that the costs could be very high, and, 
indeed, they could be very high. But when we were starting low-
cost measures, including emissions trading, we were discovering 
for ourselves how vast the possibilities are for companies to 
improve their energy efficiency. In most cases, we learned 
through their participation in this study--it was a stakeholder 
involvement, but also businesses, experts, member states, et 
cetera, were present--that they were gradually discovering for 
themselves that if you have squeezed out some 5 to 10 percent 
energy efficiency in many different parts of the economy, that 
that is possible. So the art is to squeeze them out where they 
are available at the lowest cost.
    And, for example, we know that we have subsidy schemes in 
place in Europe for the coal sector and the energy field, in 
general, where we could do a major exercise in scaling them 
down, what we have been doing currently over the last decade. 
They are still there, but far less important than what they 
were at the beginning of the exercise.
    The Chairman. Could you send us the basis for your 
estimates of the impact on the economy and the rationale for 
it? It would be very helpful when we discuss it here, on 
proposed impacts.
    This isn't exactly on the subject, but the heat wave in 
Europe this summer was a prominent topic in the American media, 
not to mention the European media. Can you comment on 
observation or analysis of the European Commission regarding 
the correlation between that and patterns of global climate 
change? Or was that just a one-shot experience?
    Mr. Delbeke. Thank you, Mr. Chairman.
    Indeed, we are very much willing to convey all information 
to you about the economics we did, and that is, indeed, 
available already on the website of the European Commission 
Climate Change Unit.
    The Chairman. Thank you very much.
    Mr. Delbeke. But I can confirm to you that the heat wave in 
Europe and the way water has appeared in the news over the last 
couple of years has become a very dominant theme in the minds 
of the day-to-day people. We have had the flooding in Central 
Europe and in Eastern Europe, and we have had the heat wave and 
the drought last summer. So people are very, very much aware 
about how the appearance of water is becoming very irregular. 
And people talk about it and make the link with climate change.
    That's why I think the policies we have been discussing 
have been supported by an overwhelming majority in the 
Parliament, in the Parliaments of the members states, because 
people feel that something is happening. They are aware of the 
research that has been worldwide, including from the IPPC, and 
they would like to contribute their little bit to the solution 
of the problem, and would look very much forward of other 
parties in the world to do the same.
    The Chairman. Thank you. And, again, your economic 
estimates will be very helpful to us, because the major 
opposition to the very modest proposal that Senator Lieberman 
and I have is the economic consequences. And so I think it 
would be very helpful in the debate to use your analyses of 
cap-and-trade, and so I think it would be very helpful. And 
you've been very helpful to us today.
    Senator Lautenberg?

            STATEMENT OF HON. FRANK R. LAUTENBERG, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Lautenberg. Mr. Chairman, thank you very much for 
holding this hearing. I want to commend you and Senator 
Lieberman for initiating some action to deal with the problem.
    I was in Antarctica a couple of years ago, and went to the 
South Pole. I was shocked to learn that so much of the world's 
fresh water is stored in a single place. In the evening you 
could almost hear the ice groaning as it shifted. When we see 
the reduction of the ice cap there and the magnitude of that 
reduction, to me it says, ``Sound the alarm. Let's get 
something going here.''
    We all have experienced the potential aberrations from 
climate change. I happen to have been in Europe, Mr. Chairman, 
for a short stay this summer. The temperatures in Italy at that 
time were over 100 degrees, and incredibly uncomfortable.
    Mr. Delbeke, thank you for being here. With the cap-and-
trade program that we have, what influence might U.S. 
participation have? It certainly would enlarge the marketplace, 
the negotiating place, but what do you think the--how important 
an impact do you think it would have if the U.S. joined in the 
world marketplace?
    Mr. Delbeke. Thank you very much.
    On the last question, I think the impact would be 
tremendous, because there are effects related to the 
environment and effects related to the economy and the 
competitiveness. I will not hide that despite the fact that our 
overall costs are down--but, of course, and below .1 percent of 
GDP--that the impact in different sectors may be, indeed, more 
important than the .1 percent they may suggest. So we have 
distributed effects.
    And in technology-intensive sectors and in the field of new 
energy technologies and new technologies that allow to embody 
energy-efficiency requirements more strictly, we see a lot of 
positive news following our climate agenda. But there are also 
energy--part of the energy sector, part of the energy-intensive 
industry--taking products like steel and aluminum, et cetera, 
where energy use is vast--where our companies are very much 
worried about their competitiveness, knowing that this 
allowance trading is going to start on January 1, knowing that 
they'll have to be very competitive in the global markets, and 
they convey to us constantly to make the point to its major 
players in the world, including you, that it would be most 
helpful if a global environmental problem is being sorted out 
with a global effort that would minimize distortions also in 
the markets in which they operate.
    So, I think a possible decision by the United States to go 
for the act that you are discussing those days would be 
tremendously welcome in Europe and, indeed, in the rest of the 
world, as well.
    May I also indicate that the political environment within 
which we have been discussing the new laws and directives, that 
not everybody in Europe is 100 percent enthusiastic because of 
this distributive effect, but that everybody was prepared to 
get started to have the system up and running that will be the 
architecture for future emission reductions over decades. So 
testing out that architecture and being pragmatic has been a 
very important element that was creating a coalition that was 
vast, from green NGO's up to companies who feel responsible for 
what is happening in the world.
    So getting started, having this on January 1, 2005, if not 
perfect, at least getting started and optimize and review 
elements that may have to be reviewed because this or that 
elements was underestimated, has been a strong element around 
the political--or present in the political debate that we have 
had around this directive.
    Senator Lautenberg. This may be a little outside your 
field, but has there been a lot of review with your contacts 
about the impact of nuclear energy generation versus fossil 
fuel-generated energy? Because it's more popular in Europe than 
it is here, and I just wonder whether you've done an analysis 
about that.
    Mr. Delbeke. Thank you very much.
    This has, indeed, been an element; in particular, because 
several member states of the EU have already decided to phase 
out nuclear as part of their energy mix. And that will 
undoubtedly have an impact in the fuel mix and the greenhouse 
gas emissions related to energy use.
    So nuclear has not been advocated as the way out of the 
problem, but has been incorporated into the debate in saying, 
well, look, if we are going to phaseout the nuclear 
installations, as we have today in Europe, in important 
countries such as Germany or the Netherlands or in Scandinavian 
countries, et cetera, this will have an impact. And an 
emissions trading regime would help us very much to have that 
impact again incorporated into the economy in an as smoothly a 
way as possible.
    And, of course, I could mention, as well, that in the 
current emissions trading scheme that is adopted by the 
council, nuclear installations are not covered, because they do 
not have emissions of CO2. So they have a slight 
comparative advantage compared to power installations that do 
have emissions of CO2 and that are covered by the 
cap-and-trade system that we are developing. So, in strict 
terms, they are not part of the equation, but, of course, in 
overall economic terms, they have a slightly beneficial 
treatment, because they do not fall under the scheme.
    Senator Lautenberg. Thank you.
    Thanks, Mr. Chairman.
    The Chairman. I think, Mr. Delbeke, in the laws of 
unintended consequences, that a number of countries, including 
this one, over time, may take a look at advanced technology as 
it applies to nuclear power. I think there has been a dramatic 
change, both in generation of nuclear waste and size of--but 
it'll be a very interesting thing to observe.
    Mr. Delbeke, I thank you for coming today. I appreciate the 
opportunity of getting your outlook and your plans and 
proposals for the European Union, and we look forward to 
working with you and hope someday we'll all be working 
together.
    Thank you very much for being here.
    Mr. Delbeke. Thank you very much, Mr. Chairman.
    The Chairman. Thank you.
    Our next panel is Dr. Antonio Busalacchi, who is the Chair 
of the Climate Research Committee Board on Atmospheric Science 
and Climate on the National Research Council; Mr. Tom M.L. 
Wigley, who is a Senior Scientist, Climate and Global Dynamics 
Division and Climate Analysis Section, and Program Director of 
A Consortium for the Application of Climate Impact Assessments, 
the National Center for Atmospheric Research; Mr. Stephen H. 
Schneider, who is a Professor, Department of Biological 
Sciences, and Co-Director, Center for Environmental Science and 
Policy at Stanford University.
    Mr. Schneider, I particularly want to thank you for 
traveling a long way on short notice. And, Mr. Wigley, I would 
like to congratulate you, you have the longest title of any 
witness who has appeared here.
    [Laughter.]
    The Chairman. Thank you.
    Mr. Busalacchi, thank you, and we'll begin with you.

         STATEMENT OF ANTONIO J. BUSALACCHI, JR., Ph.D.

             CHAIRMAN, CLIMATE RESEARCH COMMITTEE,

          NATIONAL ACADEMY OF SCIENCES, AND DIRECTOR,

         EARTH SYSTEM SCIENCE INTERDISCIPLINARY CENTER

                (ESSIC), UNIVERSITY OF MARYLAND

    Dr. Busalacchi. Good morning, Senator.
    The Chairman. Did I have the proper pronunciation, sir?
    Dr. Busalacchi. Perfect.
    The Chairman. Thank you.
    Dr. Busalacchi. Very good. Thank you.
    Good morning, Senators.
    Senator Lautenberg. Good morning.
    Dr. Busalacchi. Thank you very much for this opportunity to 
testify.
    I'm Tony Busalacchi, Professor at the University of 
Maryland, and I serve as the Chair of the National Academy's 
Climate Research Committee.
    I will use my time this morning to summarize what most 
scientists agree to be true about the change in the Earth's 
climate.
    Understanding climate and whether it is changing and why is 
one of the most crucial questions facing humankind in the 21st 
century. This question is the subject of much scientific 
research and, of course, policy debate, since the economic and 
environmental implications could be large.
    The National Academies have produced a number of reports 
focused on understanding climate in recent years, and my 
testimony draws heavily from two of these, a February 2003 
report here, I show here, that gives input to the 
Administration's draft U.S. Climate Change Science Program's 
strategic plan, and a 2001 report called ``Climate Change 
Science'' that was done at the request of the White House. This 
report answered a series of specific questions designed to 
identify areas in climate-change science, where there are the 
greatest certainties and uncertainties. If you haven't read 
this report, there's an excellent summary, only about 25 pages 
long, written in very straightforward language.
    As explained in that report, ``Climate Change Science,'' 
there is wide scientific consensus that climate is, indeed, 
changing. Greenhouse gases are accumulating in the Earth's 
atmosphere as a result of human activities, causing surface air 
temperatures and subsurface ocean temperatures to rise.
    Our confidence in this conclusion is higher today than it 
was ten or even 5 years ago. Yet uncertainties remain, because 
there is a level of natural variability inherent in the climate 
system. On timescales of decades and centuries, that can be 
difficult to interpret with precision, because we gather this 
evidence from sparse observations, numerical models, and proxy 
records such as ice cores and tree rings. Despite the 
uncertainties, however, there is widespread agreement that the 
observed warming is real and particularly strong within the 
past 20 years.
    A diverse array of evidence supports the view that global 
air temperatures are warming. Instrumental records from land 
stations and ships indicate global mean surface temperatures 
have warmed by about .7 to 1.5 degrees Fahrenheit during the 
20th century. The warming trend is spatially widespread and is 
inconsistent with the global retreat of mountain glaciers, 
reductions in snow cover extent, the earlier spring melting of 
ice on rivers and lakes, 20th century sea-level rise, to name a 
few.
    The ocean, which represents the largest reservoir of heat 
in the climate system, has warmed since the 1950s by about a 
tenth of a degree, when averaged from the surface down two 
miles at depth into the ocean.
    The role that human activities have played in causing these 
climate changes has been the subject of debate and research for 
more than a decade. There is no doubt that humans have modified 
the abundances of the key greenhouse gases in the atmosphere--
in particular, carbon dioxide, methane, nitrous oxide, and 
tropospheric ozone. These gases are at their highest recorded 
levels. In fact, ice core records of carbon dioxide and methane 
show that today's amounts are significantly large than at any 
period over the last 400,000 years.
    The increase in these greenhouse gases is primarily due to 
fossil fuel combustion, agriculture, and land-use changes. 
Recent research advances have led to widespread acceptance that 
the human-induced increase in greenhouse gas abundance is 
responsible for a significant portion of the observed climate. 
The precise size of that portion is difficult to quantify 
against the backdrop of natural variability and climate, 
forcing uncertainties.
    Because the Earth's system responds so slowly to changes in 
greenhouse gas levels, and because altering established energy-
use practices is difficult, changes in impacts attributable to 
these factors will continue during 21st century and beyond. 
Current models indicate the large potential range for future 
changes, with global mean surface temperature warming by 
anywhere from two-and-a-half to ten-and-a-half degrees 
Fahrenheit by 2100.
    Given increasing evidence of how humans have modified the 
Earth's climate over the last century, it is imperative for the 
Nation to continue directing resources for better observing, 
modeling, and understanding the form future changes in climate 
and climate variability may take, the potential positive and 
negative impacts of these changes on humans and ecosystems, and 
how society can best mitigate or adapt to these changes.
    Thank you for this opportunity to talk about climate 
change. This is a problem that affects us all and a problem the 
scientific communities does take seriously. It does not shy 
away from its responsibility to provide objective scientific 
assessment in support of sound policy decisions.
    I'll be happy to take any questions at the appropriate 
time.
    [The prepared statement of Dr. Busalacchi follows:]

   Prepared Statement of Antonio J. Busalacchi, Jr., Ph.D. Chairman, 
Climate Research Committee, National Academy of Sciences, and Director, 
 Earth System Science Interdisciplinary Center (ESSIC), University of 
                                Maryland
    Good morning. Thank you very much for this opportunity to testify. 
I am Dr. Tony Busalacchi, a professor at the University of Maryland and 
I serve as the Chair of The National Academies' Climate Research 
Committee. I will use my time this morning to summarize what most 
scientists agree to be true about change in the Earth's climate.
    Understanding climate and whether it is changing, and why, is one 
of the most crucial questions facing humankind in the twenty-first 
century. This question is the subject of much scientific research and, 
of course, policy debate, since the economic and environmental 
implications could be large. The National Academies have produced a 
number of reports focused on understanding climate in recent years and 
my testimony draws heavily from two of these: a February 2003 report 
that gives input to the Administration's draft U.S. Climate Change 
Science Program Strategic Plan (NRC 2003) and a 2001 report called 
``Climate Change Science'' that was done at the request of the White 
House (NRC 2001). The latter report answered a series of specific 
questions designed to identify areas in climate change science where 
there are the greatest certainties and uncertainties. If you haven't 
read this report, it is an excellent summary (only 25 pages long) 
written in very accessible language.
    As is explained in ``Climate Change Science,'' there is wide 
scientific consensus that climate is indeed changing. Greenhouse gases 
are accumulating in Earth's atmosphere as a result of human activities, 
causing surface air temperatures and subsurface ocean temperatures to 
rise. Our confidence in this conclusion is higher today than it was 
ten, or even five years ago, but uncertainty remains because there is a 
level of natural variability inherent in the climate system on time 
scales of decades to centuries that can be difficult to interpret with 
precision because we gather this evidence from sparse observations, 
numerical models, and proxy records such as ice cores and tree rings. 
Despite the uncertainties, however, there is widespread agreement that 
the observed warming is real and particularly strong within the past 
twenty years.
    As the report further explains, human-induced warming and 
associated sea level rises are expected to continue through the 21st 
century. Computer model simulations and basic physical reasoning show 
that there will be secondary effects from these changes. These include 
increases in rainfall rates and increased susceptibility of semi-arid 
regions to drought. The impacts of these changes will depend on the 
magnitude of the warming and the rate with which it occurs.
    A diverse array of evidence supports the view that global air 
temperatures are warming. Instrumental records from land stations and 
ships indicate that global mean surface air temperature warmed about 
0.4-0.8 degrees C (0.7-1.5 degrees F) during the 20th century. The 
warming trend is spatially widespread and is consistent with the global 
retreat of mountain glaciers, reductions in snow-cover extent, the 
earlier spring melting of ice on rivers and lakes, the accelerated rate 
of rise of sea level during the 20th century relative to the past few 
thousands years and the increase in upper-air water vapor and rainfall 
rates over many regions. A lengthening of the growing season also has 
been documented in many areas, along with an earlier plant flowering 
season and earlier arrival and breeding of migratory birds. Some 
species of plants, insects, birds and fish have shifted toward higher 
latitudes or higher elevations, often together with associated changes 
in disease vectors. The ocean, which represents the largest reservoir 
of heat in the climate system, has warmed by about 0.05 degrees C (0.09 
degrees F) averaged over the layer extending from the surface down to 
10,000 feet, since the 1950s.
    It has been said that the Arctic will be the ``canary in the coal 
mine'' where the effects of global warming will be felt first and with 
the greatest magnitude. Analysis of recently declassified data from 
U.S. and Russian submarines indicates that sea ice in the central 
Arctic has thinned since the 1970s, and satellite data indicate a 10-15 
percent decrease in summer sea ice concentration over the Arctic as a 
whole. Satellite measurements also indicate that the time between the 
onset of sea-ice melting and freeze-up has increased significantly from 
1978 through 1996, and the number of ice-free days have increased over 
much of the Arctic Ocean. A decline of about 10 percent in spring and 
summer continental snow cover extent over the past few decades also has 
been observed. Looked at in total, the evidence paints a reasonably 
coherent picture of change, but the conclusion that the cause is 
greenhouse warning is still open to debate; many of the records are 
either short, of uncertain quality, or provide limited special 
coverage.
    As you may have seen in the press, a large ice shelf recently broke 
up along the coast of northeast Canada's Ellesmere Island, followed by 
the drainage of an ice-dammed lake that had built up behind it 
(Disraeli Fiord). The Ward Hunt Ice Shelf was the largest remaining 
piece of an ice shelf that once, a century ago, rimmed the entire 
northern coast of Ellesmere Island. I have not studied this particular 
incident, nor has the Academy, but researchers working at the site had 
documented reductions in the freshwater volume of the lake accompanied 
by a rise in mean annual air temperature and have stated that they 
believe this change can be attributed to global warming. Other 
scientists have been more cautious, noting that many of the changes 
being seen in the Arctic could have more to do with long-term world 
climate patterns than with the release of carbon dioxide and other 
greenhouse gases. Still, atmospheric chemist and National Academy of 
Sciences member Ralph J. Cicerone of the University of California at 
Irvine was quoted in the Washington Post article on the ice-shelf 
breakup as saying:

        ``But even though this ice melt and permafrost thawing 
        [probably happened] too fast to be due to global warming, this 
        is [a] prototype of what we should expect after the next few 
        decades. . . . This is a good dress rehearsal for the kinds of 
        things we could see later.''

    Some of the changes being experienced at high latitudes are 
believed to be reflections of changes in wintertime wind patterns 
rather than a direct consequence of global warming per se. It is 
important to note that the rate of warming has not been uniform over 
the 20th century. Much of the warming occurred prior to 1940 and during 
the past few decades. The Northern Hemisphere as a whole experienced a 
slight cooling from 1946-1975, and the cooling during that period was 
quite marked over the eastern United States. The cause of this hiatus 
in the warming is still under debate. One possible cause might be the 
buildup of sulfate aerosols due to the widespread burning of high 
sulfur coal during the middle of the century followed by a decline; it 
is also possible that at least part of the rapid warming of the 
Northern Hemisphere during the first part of the 20th century and the 
subsequent cooling were of natural origin--a remote response to changes 
in the oceanic circulation, or variations in the frequency of major 
volcanic emissions or in solar luminosity.
    The role that human activities have played in causing these climate 
changes has been a subject of debate and research for more than a 
decade. There is no doubt that humans have modified the abundances of 
key greenhouse gases in the atmosphere, in particular carbon dioxide, 
methane, nitrous oxide, and tropospheric ozone. These gases are at 
their highest recorded levels. In fact, the ice-core records of carbon 
dioxide and methane show their twentieth century atmospheric abundances 
to be significantly larger than at any period over the past 400,000 
years. The increase in these greenhouse gases is primarily due to 
fossil fuel combustion, agriculture, and land-use changes. Recent 
research advances have led to widespread acceptance that the human-
induced increase in greenhouse gas abundances is responsible for a 
significant portion of the observed climate changes. The precise size 
of that portion is difficult to quantify against the backdrop of 
natural variability and climate forcing uncertainties.
    Because the Earth system responds so slowly to changes in 
greenhouse gas levels, and because altering established energy-use 
practices is difficult, changes and impacts attributable to these 
factors will continue during the twenty-first century and beyond. 
Current models indicate a large potential range for future climates, 
with global mean surface temperature warming by 1.4 to 5.8 +C (2.5 to 
10.4 +F) by 2100 (IPCC, 2001).
    Given increasing evidence of how humans have modified the Earth's 
climate over the last century, it is imperative for the Nation to 
continue directing resources toward better observing, modeling, and 
understanding of what form future changes in climate and climate 
variability may take, the potential positive and negative impacts of 
these changes on humans and ecosystems, and how society can best 
mitigate or adapt to these changes.
    Thank you for this opportunity to talk about climate change. This 
is a problem that affects us all, and a problem the scientific 
community does not shy away from in terms of its responsibility to 
provide objective scientific assessment in support of sound policy 
decisions. I'd be happy to take any questions.
References
    IPCC, 2001. Climate Change 2001: The Scientific Basis. Contribution 
of Working Group I to the Third Assessment Report of the 
Intergovernmental Panel on Climate Change, eds. J.T. Hought, Y. Ding, 
D.J. Griggs, M. Noguer, P.J. van der Linden, X. Dai, K. Maskell, and 
C.A. Johnson. Cambridge, U.K.: Cambridge University Press.
    National Research Council, 2003. Planning Climate and Global Change 
Research: A Review of the Draft U.S. Climate Change Science Program 
Strategic Plan. The National Academies Press.
    National Research Council, 2001. Climate Change Science: An 
Analysis of Some Key Questions. The National Academies Press.

    The Chairman. Thank you very much, Doctor.
    Dr. Wigley?

STATEMENT OF TOM M.L. WIGLEY, SENIOR SCIENTIST, NATIONAL CENTER 
                    FOR ATMOSPHERIC RESEARCH

    Dr. Wigley. Thank you, Senator McCain, for giving me the 
opportunity to talk about this issue.
    I've produced a written statement that I request be 
formally included in the record.
    The Chairman. Without objection.
    Dr. Wigley. My name is Tom Wigley. I'm a Senior Scientist 
at the National Center for Atmospheric Research, and I've been 
involved in climate change research for 20 or 30 years.
    This is a brief statement that will flesh out some of the 
information that Dr. Busalacchi gave, in a quantitative sense. 
I'm going to address three issues. I want to say a little bit 
about the 20th century warming and our understanding of the 
causes for that warming. I'm going to say a little bit about 
the more recent record, over the last 25 years, of satellite 
temperatures of the free atmosphere, and then quantify the 
effects of human influences over the next hundred years.
    This diagram shows----
    The Chairman. Can you hold a minute, Dr. Wigley? In my 
declining years, I have trouble seeing, so I will come closer.
    [Laughter.]
    Dr. Wigley. Yes, I'm sympathetic to that. I don't know 
whether ``declining'' is really the right word to use, however.
    OK. This diagram shows--the black, with little dots, is the 
observed global warming temperature record, and you can see 
that there's a warming here of roughly seven-tenths of a degree 
Centigrade over the last hundred years. In terms of Fahrenheit, 
that's a little over one degree.
    And then there are two sets of curves. The lower two curves 
show model estimates of what the changes would have been if we 
accounted only for natural external forcing factors on the 
climate system. And the upper two curves correspond to the 
results that would attain if we included human influences. And 
you can see that including human influences is essentially the 
only way that we can explain the observed warming. And 
particularly, the dramatic warming over the last 30 to 50 years 
is largely the result of human factors. Natural variability 
alone cannot explain the past record.
    This little diagram acts as a credibility test for climate 
models, and I'm going to give one other test for these climate 
models.
    Now, this diagram looks at changes over the last 20 years, 
where we have very precise records from satellite observations 
using an instrument called the microwave sounding unit. And 
there are four results here. And on the lefthand side, labeled 
UAH, is one of the records that is based on satellite data from 
the University of Alabama at Huntsville. The RSS curve uses the 
same data, but is a different way of analyzing the changes from 
one satellite to another. And the ERA 40 curve is a composite 
of a variety of different types of evidence. The final curve, 
on the right-hand side model, shows the results that would be 
expected for tropospheric temperature trends using climate 
models and using our best estimates of what the forcing of the 
climate system has been over this time period.
    You can see there are a lot of uncertainties. You can see 
that the RSS and ERA 40 curves, or trends, agree very well with 
the model expectation. There's some uncertainty associated with 
the satellite temperature records, and that's indicated by the 
difference between the two lefthand RSS and UAH panels there. 
So this is not a totally resolved issue, but there appears to 
be no inconsistency between model expectations and observed 
temperatures.
    Given that credibility test for models, then we can use, 
with some confidence, these models for predicting what might 
happen in the future. And this diagram shows the past warming 
record, from minus-.7 Celsius up to that little triangle there 
in the year 2000, and then future projections. The two--the red 
and blue curves, these are just for one particular emission 
scenario or projection of what emissions of greenhouse gases 
might be in the future. The red and blue curves are an estimate 
of the uncertainty associated with the buildup of carbon 
dioxide and other gases and with the response of the climate 
system. You can see that the warming, even at the low end, the 
blue curve, is substantially than what has occurred over the 
last hundred years. The yellow bar, on the right-hand side, 
accounts for other uncertainties in emissions and other factors 
that affect the climate system, and that's the result given by 
the Intergovernmental Panel on Climate Change, IPCC. And just 
to summarize that bar, the warming at the low end is about 
double the warming over the last hundred years. At the high 
end, the warming rate is some seven times the warming rate over 
the last hundred years, clearly cause for concern.
    And, in summary, we can't explain the 20th century warming 
unless we include human influences. Roughly 75 percent of the 
warming over the last hundred years appears to be due to these 
human influences. There's no problem with satellite data as far 
as the latest measurements go, in terms of their comparison 
with model results. And in the absence of climate mitigation 
policies, it seems that the future warming might be somewhere 
between two and seven times the rate of warming that occurred 
over the last century.
    And I'd just like to conclude by thanking Senator McCain 
and other Senators involved for this balanced and responsible 
approach to the climate change problem.
    Thank you.
    [The prepared statement of Dr. Wigley follows:]

       Prepared Statement of Tom M.L. Wigley, Senior Scientist, 
                National Center for Atmospheric Research
1. Introduction
    Projections of future climate change made using state-of-the-art 
climate models suggest that changes over the coming century will be 
much larger than experienced over the past 100 years. The case for 
taking action to mitigate these human-induced (or `anthropogenic') 
changes rests on the credibility of these models. There is a vast 
scientific literature on the development and testing of these models, 
summarized in the recent ``Third Assessment Report'' (henceforth 
``TAR'') produced under the auspices of Working Group 1 of the 
Intergovernmental Panel on Climate Change (IPCC, Houghton et al., 
2001). There are two main methods of model testing--comparing model 
simulations of the present state of the climate system (such as the 
geographical patterns of temperature, rain-and snowfall, sea-level 
pressure, etc.) against observations, and comparing model simulations 
of past changes in climate with observations.
    The most recent climate models are able to simulate present-day 
climate remarkably well--with errors often less than the uncertainties 
in observational data sets. Here, however, I will not dwell on this 
aspect of model validation, but concentrate on the second method--
comparison of observed and model-simulated changes. I will show that 
models simulate temperature changes over the past 100+ years with 
considerable fidelity provided they are driven (or ``forced'') by 
observed changes in both natural forcing agents (such as variations in 
the output of the Sun) and anthropogenic factors (such as changes in 
greenhouse gas concentrations and aerosol particle changes). Natural 
forcing factors alone cannot explain the past record.
    Using the results from this model/observed data comparison, I will 
give projections of future changes in global-mean temperature for a 
central scenario for future emissions. These results, which are 
consistent with projections given in the IPCC TAR, imply, for this 
particular emissions scenario, a future warming rate of three to five 
times the warming that occurred over the 20th century. The uncertainty 
range expands to two to seven times the past warming rate when 
emissions and other uncertainties are accounted for. Even at the low 
end, these projections are cause for concern.
2. Temperature changes over the 20th century
    The simplest indicator of climate change is the global-mean, near-
surface temperature--the average over the Earth's surface area of 
temperature observations obtained primarily for the purposes of weather 
forecasting. After carefully correcting these data for instrumental and 
exposure changes, global-mean temperature shows a warming trend of 
about 0.7 +C over the past 100 years. This warming trend has, 
superimposed on it, substantial variability on monthly, annual and 
decadal timescales associated with natural climate processes such as El 
Ninno and other interactions between the land, ocean and cryosphere 
(ice)--see Figure 1.
    To understand the causes of the century timescale warming trend we 
make use of climate models. Such models are an efficient way to 
synthesize and integrate, in an internally-consistent way, the many 
complexities and interactions of the climate system. The basic 
procedure begins by defining, independently of the model, the changes 
in the external drivers of the climate system. We then use these 
drivers as input forcing factors for the model and run the model to see 
how well it agrees with observed changes. In doing so, we try to 
quantify any uncertainties in both the inputs and the model structure 
to see what affects these uncertainties might have on the model 
outputs.
    The forcing factors are of two types: natural agents like the 
effects of large volcanic eruptions and changes in the energy output of 
the Sun; and a variety of anthropogenic factors. Volcanic eruptions 
have a strong short-term cooling effect (Robock, 1999), and only a 
minimal effect on decadal or longer timescales. Since the goal here is 
to understand the century timescale warming, I will not consider 
volcanic effects further in this analysis, beyond noting that climate 
models are able to simulate the short-term coolings well. For changes 
in solar output, I use the recent estimates of Foukal (2002) from 1915 
onwards and Hoyt and Schatten (1993) prior to 1915. Other estimates of 
solar output changes yield similar results. I do not consider the 
hypothesized amplification of solar forcing through the effects of 
cosmic rays, partly because there is no credible physical basis for 
this amplification. I note, however, that any assumed amplification of 
solar forcing degrades the agreement between model and observed 
results.
    The anthropogenic factors include changes in the concentrations of 
greenhouse gases (carbon dioxide, methane, nitrous oxide, ozone, and 
various man-made halocarbons, of which the CFCs--chlorofluorocarbons--
are the most well known), and changes in the atmospheric loading of 
small particles (aerosols) associated primarily with fossil fuel 
burning. The greenhouse gases, of which carbon dioxide is the most 
important, have a warming effect. Aerosols, depending on type, may have 
either a warming or cooling effect. To date, the cooling effect 
dominates, but the magnitude of this cooling is still uncertain. In the 
results below I consider a range of possible values for the magnitude 
of aerosol cooling.
    For the climate model I use the model employed by IPCC to produce 
their global-mean temperature projections (see Wigley and Raper, 2002, 
and references therein). This is a relatively simple model, but it has 
been rigorously tested against much more complex coupled Atmosphere/
Ocean General Circulation Models (AOGCMs) and is able to simulate the 
results of these models with high accuracy over a wide range of 
conditions (Raper et al., 2001).
    The simpler model has the advantage that it can be used to examine 
the effects of uncertainties in the parameters that control the 
response of the climate system to external forcing. The primary source 
of uncertainty is the ``climate sensitivity'' parameter (designated by 
``S'' below). This is usually characterized by the eventual (or 
``equilibrium'') global-mean warming that would occur if we doubled the 
amount of carbon dioxide in the atmosphere. It has an uncertainty range 
of 1.5 +C to 4.5 +C with about 90 percent confidence. I will give 
results for sensitivity values of 2 +C and 4 +C to show the importance 
of this factor. For more information on sources of modeling 
uncertainty, see Wigley and Raper (2001).


    Figure 1: Observed versus model-simulated changes in global-mean, 
near-surface temperature. For observed data, see Jones et al., (1999) 
and Jones and Moberg (2003).

    Figure 1 compares observed near-surface temperature changes with 
model predictions. The four model-based curves consider two forcing 
cases; one in which the model is driven solely by the primary natural 
driving force, changes in the output of the Sun (lower two curves), and 
one where both natural and anthropogenic forcings are used to drive the 
model (upper two curves). The two curves for each case reflect the main 
sources of uncertainty in the modeling exercise, the magnitude of 
aerosol forcing, and the magnitude of the climate sensitivity.
    The upper two curves show that it is possible to obtain a good 
match between the model and observations by using a low aerosol forcing 
(-0.8W/m\2\ in 1990) combined with low climate sensitivity (S = 2.0 
+C), or by using a relatively high aerosol forcing (-1.3W/m\2\ in 1990) 
combined with low climate sensitivity (S = 4.0 +C). Since these values 
are within their accepted ranges of uncertainty, it is clear that there 
is no inconsistency between models and observations. The observations, 
however, do not narrow the ranges of uncertainty for these two 
parameters, so, in making projections of future change, we need to 
account for these uncertainties.
    The lower two curves show the expected global-mean temperature 
changes in the absence of anthropogenic forcing. Up to around the mid 
1970s both the natural-forcing-only and the natural-plus-anthropogenic 
forcing cases fit the observations reasonably well. After this, the 
natural-only case provides an increasingly bad fit, while the natural-
plus-anthropogenic case fits the observed warming trend extremely well. 
It is clear from this that anthropogenic forcing effects must be 
considered in order to explain the observations.
3. Satellite-based temperature changes since 1979
    One of the more puzzling aspects of recent climate change has been 
the apparent inconsistency between the linear trends in tropospheric 
temperatures (from satellite-based Microwave Sounding Units--MSU data), 
surface air temperatures, and model results (National Academy of 
Sciences (NAS), 2001). The original MSU data (see Christy et al., 2003, 
and earlier references cited therein--this data set is referred to 
below as the UAH data, since its developers are associated with the 
University of Alabama at Huntsville) showed little or no warming trend 
since the beginning of the satellite record in 1979, while both the 
surface data and model results for the surface and for the troposphere 
(as illustrated in Figure 1) showed a substantial warming trend. The 
NAS (2001) report concluded that there was no reason to suspect serious 
errors in any of the trends, but this rather down-played what is really 
an important inconsistency.
    More recent work has moved towards resolving this inconsistency. 
First, an entirely independent analysis of the raw satellite data (the 
MSU2 data specifically) has recently been carried by Mears et al., 
(2003--these authors are with Remote Sensing Systems, Santa Rosa, CA, 
so their data set is referred to below as the RSS data). This new 
analysis has a warming trend that is both larger than the UAH trend and 
more consistent with both the surface and model data (Santer et al., 
2003a). Second, a new reanalysis product (the ERA-40 data produced by 
the European Centre for Medium-range Weather Forecasting), when used to 
construct equivalent MSU2 temperature trends, also shows a larger 
warming trend than the UAH data. (Reanalysis is a technique for 
synthesizing diverse observational data sets, including both satellite 
and radiosonde data, to produce an internally-consistent picture of 
changes in atmospheric meteorological conditions--the ERA exercise is 
described in Gibson et al., 1997.) Third, analysis of changes in the 
height of the tropopause--the boundary between the lowest layer of the 
atmosphere, the troposphere, where temperatures decrease with height, 
and the layer above this, the stratosphere, where temperatures either 
change little or increase with height--show that these changes can only 
be explained if the troposphere is warming (Santer et al., 2003b).
    Trends in the three observed data sets, UAH, RSS and ERA-40 are 
shown in Figure 2, along with model results consistent with those shown 
in Figure 1. The observed trends have substantial statistical 
uncertainty because of the ``noise'' of inter-annual variations about 
the underlying trend. The statistical uncertainty ranges shown in the 
Figure are the `two-sigma' ranges, corresponding to 95 percent 
confidence intervals. For the model results there are additional 
uncertainties associated primarily with radiative forcing and climate 
sensitivity uncertainties, as explained above.


    Figure 2: Trends over 1979-2001 and trend uncertainties for 
different tropospheric data sets.

    In a statistical sense, Figure 2 shows that there is no significant 
difference between any of the trends. While it is clear that the UAH 
results are qualitatively different from the other results, because of 
the uncertainties involved it is too soon to pass judgment. As noted by 
Santer et al., (2003a), model results cannot be used as a basis for 
selecting one observed data set over another. The key result of this 
comparison is that it exposes uncertainties that are larger than 
hitherto suspected. If, however, the UAH data are found to have 
underestimated the warming trend in the troposphere, then this will 
resolve an important climatological `problem' and provide a strong 
endorsement for the validity of current climate models.
4. Supporting evidence for 20th century climate change
    The temperature results above provide strong evidence for the 
reality of a strong warming trend over the 20th century. The warming is 
consistent with model expectations and can only be explained if one 
includes anthropogenic factors as part of the cause. From Figure 1, the 
natural warming trend over the 20th century accounts for only 23-32 
percent of the total trend. The observations are also consistent with a 
climate sensitivity in the standard 1.5 +C to 4.5 +C range, and are not 
consistent with a lower value.
    These results are consistent with many other lines of evidence that 
there are unusual changes occurring in the climate system. Not only are 
global-mean temperature changes consistent with models, but the 
horizontal and vertical patterns of change also agree with model 
predictions (TAR). In addition, a sharp cooling trend has been observed 
in the stratosphere that agrees well with model predictions (Santer et 
al., 2003a). Sea level has been rising steadily (TAR), partly as a 
result of warming in the ocean that agrees with model expectations 
(Barnett et al., 2001) and partly due to the melting of glaciers and 
small ice sheets (TAR). Sea ice area and thickness have also been 
decreasing in accord with the changes suggested by models (Vinnikov et 
al., 1999). Sea-level pressure patterns have shown significant changes 
and, once again, these changes are similar to those predicted by models 
(Gillett et al., 2003). The frequency of precipitation extremes has 
also been increasing (Karl and Knight, 1998; Groisman et al., 1999), a 
result that agrees both with simple physical reasoning (Trenberth et 
al., 2003) and with model predictions (Wilby and Wigley, 2002). 
Finally, based on paleoclimatological evidence, the warmth that 
characterizes the late 20th century is, at least for the Northern 
Hemisphere, unprecedented in at least 1000 years (Mann and Jones, 
2003).
5. Climate change over the 21st century
    Given the weight of evidence endorsing the credibility of climate 
models, at least at large spatial scales, we can safely use these 
models to estimate what changes might occur over the next 100 years. To 
do this we must first estimate how the emissions of all climatically-
active gases will change in the future. As part of the IPCC Third 
Assessment Report process, a large set of future emissions scenarios 
was developed, all under the ``no-climate-policy'' assumption (referred 
to as the ``SRES'' scenarios for ``Special Report on Emissions 
Scenarios''; Nakiccenovicc and Swart, 2000). In total there are 35 
complete scenarios spanning a range of assumptions about future 
population growth, economic growth, technological change, and so on--
and each set of assumptions leads to a different set of emissions. In 
order to predict future climate one must take account of the attendant 
uncertainties in emissions, since it is these that drive changes in the 
composition of the atmosphere, which in turn drive changes in the 
climate system. At each step, in going from emissions to atmospheric 
composition changes, and from composition changes to climate, there are 
other uncertainties that must be taken into account. Most of these 
uncertainties were accounted for in the TAR, where the estimated 
changes in global-mean temperature over 1990 to 2100 were given as 1.4 
+C to 5.8 +C. A more formal probabilistic analysis was given by Wigley 
and Raper (2001).
    Here, to illustrate the procedure, I will use a single emissions 
scenario, the A1B scenario, which is roughly in the middle of the range 
covered by the SRES set. I will then account for uncertainties in 
aerosol forcing and climate sensitivity as in Figure 1 (recognizing 
that this does not span the full range of uncertainties in these 
parameters). The projected future changes in global-mean temperature, 
compared with past changes, are shown in Figure 3.


    Figure 3: Projected global-mean warming.

    Over 2000 to 2100 the warming range is 2.0 +C to 3.6 +C, which 
corresponds to warming rates of roughly three to five times the rate of 
warming over the 20th century--and temperatures are still increasing at 
the end of the century. A wider uncertainty range is obtained when 
other uncertainties are accounted for, as in the TAR analysis (shown by 
the bar on the right side of the Figure). Even at the low end of the 
range of possibilities, the warming rate over 2000 to 2100 is double 
the 20th century warming rate, while at the top end the future rate is 
seven times the past rate.
    Major changes in all aspects of climate will occur in parallel with 
these unprecedented global-mean temperature increases. Many of these 
will be beyond our present adaptive capabilities (particularly in 
lesser developed countries), and will undoubtedly lead to damages to 
natural ecosystems and managed systems such as agriculture and water 
resources, and to possibly serious consequences for health and the 
spread of pests and disease. While the changes and their impacts cannot 
be predicted in detail, and while some of the consequences of future 
climate and atmospheric change may be positive, it would be prudent to 
insure against adverse changes either through improving our adaptive 
capabilities and/or, through emissions mitigation, reducing the 
magnitude of future climate change. In the absence of climate policies, 
as time goes by we will be moving further and further into unknown 
climate territory and committing ourselves to even larger future 
changes. Because of the inertia in both socioeconomic systems and the 
climate system, it is likely that quite aggressive actions may be 
required to avoid (quoting Article 2 of the Framework Convention on 
Climate Change) ``dangerous interference with the climate system'', and 
ensure that we are able to stabilize the composition of the atmosphere 
and the climate at acceptable levels.
6. References
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anthropogenic climate change in the world's ocean. Science, 292, 270-
274.

    Christy, J.R., R.W. Spencer, W.B. Norris, and W.D. Braswell, 2003: 
Error estimates of version 5.0 of MSU-AMSU bulk atmospheric 
temperatures. Journal of Atmospheric and Oceanic Technology, 20, 613-
629.

    Foukal, P., 2002: A comparison of total variable solar and total 
ultraviolet irradiance outputs in the 20th century. Geophysical 
Research Letters, 29, 10.1029/2002GL015474.

    Gibson, J.K., P. Kaallberg, S. Uppala, A. Hernandez, A. Nomura, and 
E. Serrano, 1997: ECMWF Re-Analysis Project Report Series. 1. ERA 
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    Gillett, N.P., F.W. Zwiers, A.J. Weaver, and P.A. Stott, 2003: 
Detection of human influence on sea-level pressure. Nature, 422, 292-
294.

    Groisman, P.Ya., et al., 1999: Changes in the probability of heavy 
precipitation: Important indicators of climate change. Climatic Change, 
42, 243-283.

    Houghton, J.T., Y. Ding, D.J. Griggs, M. Noguer, P.J. van der 
Linden, X. Dai, K. Maskell, and C.A. Johnson, Eds, 2001: Climate Change 
2001: The Scientific Basis. Cambridge University Press, 881 pp.

    Hoyt, D.V., and K.H. Schatten, 1993: A discussion of plausible 
solar irradiance variations, 1700-1992. J. Geophys. Res., 98, 18895-
18906.

    Jones, P.D., and A. Moberg, 2003: Hemispheric and large-scale 
surface air temperature variations: An extensive revision and an update 
to 2001. Journal of Climate, 16, 206-223.

    Jones, P.D., M. New, D.E. Parker, S. Martin, and I.G. Rigor, 1999: 
Surface air temperature and its changes over the past 150 years. 
Reviews of Geophysics, 37, 173-199.

    Karl, T.R., and R.W. Knight, 1998: Secular trends in precipitation 
amount, frequency, and intensity in the United States. Bull. Amer. Met. 
Soc., 79, 231-241.

    Mann, M.E., and P.D. Jones, 2003: Global surface temperatures over 
the past two millennia. Geophysical Research Letters, 30, 10.1029/
2003GL017814.

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the MSU channel 2 tropospheric temperature record. Journal of Climate 
(in press).

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Emissions Scenarios. Cambridge University Press, 570 pp.

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An Analysis of Some Key Questions. National Academy Press, Washington, 
D.C., 29 pp.

    Raper, S.C.B, J.M. Gregory, and T.J. Osborn, 2001: Use of an 
upwelling-diffusion energy-balance model to simulate and diagnose A/
OGCM results. Climate Dynamics, 17, 601-613.

    Robock, A., 2000: Volcanic eruptions and climate. Reviews of 
Geophysics, 38, 191- 219.

    Santer, B.D., T.M.L. Wigley, G.A. Meehl, M.F. Wehner, C. Mears, M. 
Schabel, F.J. Wentz, C. Ammann, J. Arblaster, T. Bettge, W.M. 
Washington, K.E. Taylor, J.S. Boyle, W. Bruuggemann, and C. Doutriaux, 
2003a: Influence of satellite data uncertainties on the detection of 
externally-forced climate change. Science, 300, 1280-1284.

    Santer, B.D., M.F. Wehner, T.M.L. Wigley, R. Sausen, G.A. Meehl, 
K.E. Taylor, C. Ammann, J. Arblaster, W.M. Washington, J.S. Boyle, and 
W. Bruuggemann, 2003b: Contributions of anthropogenic and natural 
forcing to recent tropopause height changes. Science, 301, 479-483.

    Trenberth, K.E., A. Dai, R.M. Rasmussen, and D.B. Parsons, 2003: 
The changing character of precipitation. Bull. Amer. Met. Soc., 84, 
1205-1212.

    Vinnikov, K.Y., A. Robock, R.J. Stouffer, J.E. Walsh, C.L. 
Parkinson, D.J. Cavalieri, J.F.B. Mitchell, D. Garrett, and V.F. 
Zakharov, 1999: Global warming and Northern Hemisphere sea ice extent. 
Science, 286, 1934-1937.

    Wilby, R.L., and T.M.L. Wigley, 2002: Future changes in the 
distribution of daily precipitation totals across Nth America. 
Geophysical Research Letters, 29, 10.1029/2001GL013048.

    Wigley, T.M.L., and S.C.B. Raper, 2001: Interpretation of high 
projections for global-mean warming. Science, 293, 451-454.

    Wigley, T.M.L., and S.C.B. Raper, 2002: Reasons for larger warming 
projections in the IPCC Third Assessment Report. Journal of Climate, 
15, 2945-2952.

    The Chairman. Thank you very much.
    Dr. Schneider?

         STATEMENT OF STEPHEN H. SCHNEIDER, PROFESSOR,

        DEPARTMENT OF BIOLOGICAL SCIENCES; CO-DIRECTOR,

          CENTER FOR ENVIRONMENTAL SCIENCE AND POLICY,

                      STANFORD UNIVERSITY

    Dr. Schneider. Thank you very much, Senator, and I 
appreciate your noticing my jet-lagged eyes.
    [Laughter.]
    Dr. Schneider. But let me begin with a personal point, 
which is how much I appreciate having testified before 
committees in which you sat since--maybe neither one of us 
wants to remember back to the mid-1980s, and the 1990s in the 
case of Senator Lieberman. And many of us in the outside 
community deeply appreciate your staying with this issue.
    We also appreciate the opportunity to try to clarify very 
briefly, which is all I can do in the few minutes I have now, 
some of the items that may be confusing to people on the 
outside.
    We hear claims that climate will lead to certain 
catastrophic outcomes. We hear claims that it'll be good for 
you from CO2 fertilization. And I'll state my 
prejudice at the outset, sir, which is that ``the end of the 
world'' and ``good for you'' are the two lowest probability 
outcomes.
    Almost everything else in between is more likely, and that 
includes a substantial number of events which could have 
serious consequences; and, therefore, I find that entirely 
justifiable that you and your colleagues are looking to find 
solutions which are both fair, cost effective, and able to 
handle the reduction in the growth rate of the gases that we 
think will create this problem.
    I was asked, thinking back to a Committee that you were on 
in May 8, 1989, and, in fact, it was this very Committee, there 
was contention about the degree to which uncertainty would 
allow us to say anything. And I was pressed by Senators at the 
time to say, ``Well, you don't know this based on looking at 
the temperature changes of the kind that Dr. Wigley just 
mentioned.'' And the point that I said--I just looked it up--I 
said, ``Most of our confidence that the future will change is 
about the heat-trapping properties of gases, not so much based 
on the performance of the planet in this century. If we insist 
on waiting for the planet to catch up with what we expect it to 
do, it is another 10 to 20 years to prove that.''
    Well, so I put myself on the line. That was 14 years ago, 
and I would now argue that nature has caught up with theory. 
And precisely what Tom Wigley said has driven the vast bulk of 
climate scientists to assert that despite remaining 
uncertainties in many aspects of the problem, it's 
overwhelmingly clear that something unusual is going on in the 
last few decades. And recent studies are suggesting it isn't 
just the last few decades relative to the last hundred years, 
with the graphics we saw, but the last few decades are unusual 
over the timescale of 2,000 years.
    Moreover, there are those who assert, ``Well, maybe this is 
just an accident of nature. Maybe it's just the sun that did 
it.'' And, of course, it raises the question among most serious 
scientists, well, if the sun is acting so perverse, why did it 
choose the last two decades when we also happened to have 
increased greenhouse gases and land-use changes and other 
things?
    So the best explanation we have for the complex set of 
issues is, as Dr. Wigley has said, and the IPCC, and the 
National Research Council, a combination of natural and human 
factors. And in the recent years, the human factors are 
probably becoming dominant.
    Now, that's becoming dominant for the warming of up to the 
degree or so Fahrenheit we had, and what's really critical is 
predicting what might happen in the future. In order to do 
that, we depart with the climate science of arguing about 
feedbacks and oceans and so forth, and now move into the realm 
of human behavior, because we have to figure out how many 
people will there be in the world, what kind of standards of 
living will they demand, and what kind of technologies and 
organizations will they use to bring those about, because 
that's what determines the relative amount of emissions, land-
use, and so forth. Not only do those behaviors of us--which, of 
course, we have a choice over, including supporting this bill, 
which, personally, I strongly do--we also have to say as 
countries evolve and as people develop, it changes our capacity 
to adapt to the very pressures that we will put on and that 
nature will put on.
    So it all works interactively, and that what we have to do 
is recognize that our choices made in the next generation or so 
will then play themselves out, not just for the climate, but 
for our vulnerability to climate changes of all kinds over the 
century as a whole.
    Therefore, rather than dwell more on climate, let me, 
instead, talk about the ``so what.'' So what if the climate 
changes? And there's very good science that's recently emerged 
in that. In particular, two studies published this year, both 
using independent methods, showed that plants and animals in 
the world are not longer sitting passively, but actually 
beginning to respond to the six-tenths of a degree, seven-
tenths of a degree warming that's already taken place.
    Now, it shouldn't come as any surprise to somebody who's 
actually opened their eyes outside that if it gets warmer, the 
trees will flower early, or butterflies might move up 
mountains, or birds would lay eggs earlier. That wasn't the 
surprise. The surprise was that the warming we've had so far 
has been sufficient to lead to a clear statistically 
significant signal that's discernable in hundreds of species of 
plants and animals. No one has claimed harm from that yet, but 
if we can see the change already, at six-tenths of a degree-C, 
then if we end up with the numbers Dr. Wigley referred to, 
where warming would be, if we're lucky, another degree or so, 
and, unlucky, five, then we would expect dramatic 
reorganization of ecosystems. Not only would they be forced to 
move, and move rapidly, but they'd have to cross factories, 
farms, freeways, and urban settlements. And those combination 
of disturbances means that nature could very well be the prime 
reason for concern for dealing with the greenhouse effect and 
its future potential.
    Let me wrap up by saying we have to take a long view. It's 
very difficult, as we all know--there's a famous expression 
that ``politics is now, and politics is local''--and, indeed, 
there's a lot of truth in that. On the other hand, the tailpipe 
that I may have is going to do exactly the same thing to the 
climate as one from China or Russia. And as a result of that, 
we are all in this together. And as each nation fashions its 
own best solution, we have to recognize that that can only be 
partially effective without international agreements to try to 
coordinate cost-effective and fair actions.
    You mentioned at the outset, for the first testimony, that 
there were critics who suggested that it was unimaginably 
expensive to try to deal with this problem. Last summer, a 
Swedish colleague, Christian Azar, and I had published a paper, 
in the Journal of Ecological Economics, where we examined that. 
And we looked and said, supposing we did the impossible thing, 
we had a draconian carbon tax of $300 or $400 a ton, something 
that would be considered politically outrageous today, and that 
led to a stabilization of carbon dioxide in the atmosphere of 
300 or 400 parts per million, or 500, something well below any 
of the current IPCC scenarios. Well, if we costed those out 
using conventional economic models, the present value is on the 
order of something like $10 to $20 trillion. Well, that seems 
so outrageously unimaginable among the world economies, $30 
trillion, that we can understand why people were criticizing 
it.
    But then we took a step back and said, wait a minute, 
that's the present value of the entire event over a hundred 
years. All these same economic models project about a 2 percent 
per year growth rate in GDP, so the current economy, 30 
trillion, would have to be multiplied times eight. It would be 
something like 250 trillion. So if you have a 2 percent per 
year growth rate in 2100, and you have a $250 trillion economy, 
a $20 trillion cost at that time is about 1 percent of GDP. In 
other words, we could essentially solve the global warming 
problem and do it by getting 500 percent richer in personal 
income, globally averaged, and have to have that wealth occur 
in 2101 instead of 2100. I would assert that's a very 
inexpensive insurance policy to deal with a potentially 
dangerous problem, such as climate change.
    I have heard it similarly said about this very bill that 
we're discussing, that it could have very high costs. When one 
looks at numbers in absolute terms, like billions of dollars, 
that seems high. But when one looks at the very, very small 
percentages of change to GDP, you're literally talking about 
delaying 25 to 50 percent increases in personal income several 
months, at most, and that's with pessimistic assumptions.
    So I think we need to have two kinds of perspectives in 
talking about this, and one is the absolute costs, and the 
other one is the relative costs to the growth rate in the 
economy. And if one looks at that, one will find that it is not 
remotely too expensive, in my personal view, to try to slow 
down the potential of dangerous climate change that the 
previous speakers have described.
    Thank you, sir.
    [The prepared statement of Dr. Schneider follows:]

 Prepared Statement of Stephen H. Schneider, Professor, Department of 
Biological Sciences; Co-Director, Center for Environmental Science and 
                      Policy, Stanford University
    Introduction and Personal Perspective. If I may indulge in a 
personal note at the outset: it is a pleasure to appear again in front 
of both Senators McCain and Lieberman on climate change issues, having 
had that honor on several occasions since the mid-1980s with Senator 
McCain and the mid-1990s with Senator Lieberman. As these hearings 
today are about the ``case for action'' on climate change based on 
sound science assessment, I will try to emphasize aspects of the 
science of climate change less exhaustively covered by other witnesses, 
such as Dr. Tom Wigley of the National Center for Atmospheric Research, 
whose testimony on climate change science I fully associate myself 
with. Instead, I will focus more on climate change impacts. The problem 
was well-stated by Senator Lieberman when I commented to the Senate 
Environment and Publics Works Committee, chaired by the late Senator 
Chaffee, in July 1997. At that time, Senator Lieberman said:

        Changes in climate have major implications for human health, 
        water resources, food supplies, infectious diseases, forests, 
        fisheries, wildlife populations, urban infrastructure, and 
        flood plain and coastal developments in the United States. 
        Although uncertainties remain about where, when, and how much 
        climate might change as a result of human activities, the 
        changes--when they happen--may have severe impacts on many 
        sectors of the U.S. economy and on the environment. These are 
        serious risks that we must start considering (p. 15).

    This statement is equally valid today and can be further supported 
by substantially more scientific studies pointing out potentially 
serious climate impacts. I will briefly review some of these and put 
them in the context of climate change cost-benefit analyses. But first, 
a brief statement about the climate change science itself.
    While testifying to this Committee on May 8, 1989--when Senator 
McCain was a member of the Committee--I recall a discussion about the 
problem of uncertainties surrounding climate change and the question of 
how long we should wait before taking action. Some debaters had 
asserted that there wasn't enough direct evidence of human-induced 
climate change for strong policy actions. In response to Senators from 
this committee on that point, I agreed that ``Most of our confidence 
that the future will change is based on literally millions and millions 
of observations which tell us about the heat trapping properties of 
gases, not based so much on the performance of the planet this century. 
If we insist on waiting for the planet to catch up to what we expect it 
to do, it is another 10 to 20 years to prove that beyond doubt'' (p. 
150).
    Well, it is now 14 years since I said that. I believe the work of 
the Intergovernmental Panel on Climate Change (IPCC), the U.S. National 
Academy of Sciences (NAS), and others has amply demonstrated that, 
indeed, nature has ``caught up'' with our expectations of warming and 
in fact added a few surprises like rapid changes in polar regions and 
devastating heat-wave-induced deaths, even in modern, highly developed 
countries, with the more than 15,000 mortalities occurring in France 
this summer as a result of the extreme heat serving as a prime example.
    Surface warming trends are solidly grounded in observational 
science and consistent with human-induced pressures. It is 
scientifically well established that the Earth's surface air 
temperature has warmed significantly, by about 0.6 + Celsius (C) since 
1860, and that an upward trend can be clearly discerned by plotting 
historical temperatures. Such a graph would show a rapid rise in 
temperature at the end of the twentieth century. This is supported by 
the fact that all but three of the ten warmest years on record occurred 
during the 1990s. But what has been learned only in the past five years 
is that this unusual warmth in recent years is not just an anomaly in 
temperature records of the last 140 years, but the past 2000, as Figure 
1 displays.
Figure 1. 2,000-year reconstruction of global temperature changes in 
        degrees Celsius
        
        
    The blue line represents the temperature reconstruction, with 95 
percent confidence band shown in yellow and the instrumental record in 
red. Notice that the last several decades of the 20th century exceed 
the range of temperatures over the past 2,000 years. (Source: Mann and 
Jones, 2003.)

    The probability that the radical upward swing in temperature at the 
tail end of the 20th century is just a natural quirk of nature--as some 
``contrarians'' and their political supporters contend--is exceedingly 
low. If, as some assert, ``the sun did it'', then what was the sun 
doing over the previous 2 millennia? It is rather perverse to expect 
such radical behavior from the sun just now, at the same time that we 
have clear evidence of human-induced pressures coincident with the 
warming. While the possibility (at some low probability) that natural 
factors are responsible for the unusual warmth of the Earth's surface 
at the end of the 20th century cannot be ruled out completely, a much 
more likely explanation is that the warming is the result of a mix of 
natural and human-induced (anthropogenic) factors. While this alone is 
cause for worry, more disquieting still are climate change projections 
for the 21st century, especially if we assume that greenhouse gas 
emissions follow a business-as-usual path.
    It is for these reasons that I express my personal satisfaction for 
having, over the past two decades, had the opportunity to testify to 
the Senators currently leading this effort to establish a meaningful 
climate change policy for the United States that will actually result 
in emissions reductions. In my personal opinion, it is essential that 
we get on with the job of providing (mandatory) incentives to push the 
amazing industrial and intellectual capacity of our country to fashion 
cost-effective solutions. I thank the Senators for having pursued this 
issue over the long term.
    As mentioned, nature has cooperated with theory in the past few 
decades, as evidenced by the record warming. In addition, it is well-
established that human activities have caused increases in radiative 
forcing, with radiative forcing defined as a change in the balance 
between the radiation coming into and going out of the surface-
atmosphere system. In the past few centuries, atmospheric carbon 
dioxide has increased by more than 30 percent, and virtually all 
climatologists agree that the cause is human activities, and the 
burning of fossil fuels in particular.
    Despite the many well-established aspects of the science of climate 
change (e.g., anthropogenic forcing of global warming), other aspects 
(e.g., specific regional changes) are still being vigorously debated. 
In fact, the climate change debate is characterized by deep 
uncertainty, which results from factors such as lack of information, 
disagreement about what is known or even knowable, linguistic 
imprecision, statistical variation, measurement error, approximation, 
subjective judgment, and disagreement about structural models, among 
others (see Moss and Schneider, 2000). These problems are compounded by 
the global scale of climate change, which produces varying impacts at 
local scales, long time lags between forcing and its corresponding 
responses, very long-term climate variability that exceeds the length 
of most instrumental records, and the impossibility of before-the-fact 
experimental controls or empirical observations (i.e., there is no 
experimental or empirical observation set for the climate of, say, 2050 
AD, meaning all our future inferences cannot be wholly ``objective,'' 
data-based assessments--at least not until 2050 rolls around). 
Moreover, climate change is not just a scientific topic but also a 
matter of public and political debate, and degrees of uncertainty may 
be played up or down (and further confused, whatever the case) by 
stakeholders in that debate.
    Can We Define ``Dangerous'' Climate Change? Article 2 of the UN 
Framework Convention on Climate Change (UNFCCC) states that: ``The 
ultimate objective of this Convention and any related legal instruments 
that the Conference of the Parties may adopt is to achieve, in 
accordance with the relevant provisions of the Convention, 
stabilization of greenhouse gas concentrations in the atmosphere at a 
level that would prevent dangerous anthropogenic interference with the 
climate system''. The Framework Convention on Climate Change further 
suggests that:

    ``Such a level should be achieved within a time frame sufficient

   to allow ecosystems to adapt naturally to climate change,

   to ensure that food production is not threatened and

   to enable economic development to proceed in a sustainable 
        manner.''

    Thus, the term ``dangerous anthropogenic interference'' may be 
defined or characterized in terms of the consequences (or impacts) of 
climate change outcomes, which can be related to the levels and rates 
of change of climate parameters. These parameters will, in turn, be 
determined by the evolution of emissions and consequent atmospheric 
greenhouse gas concentrations. Evaluating the consequences of climate 
change outcomes to determine those that may be considered ``dangerous'' 
is a complex undertaking, involving substantial uncertainties as well 
as value judgments. In this context, the role of scientists is to 
assess the literature with a view to providing information that is 
policy-relevant, without being policy prescriptive.
    Climate Sensitivity and Climate Scenarios to 2100 and Beyond. By 
how much will humans and natural changes in the Earth each contribute 
to future climate disturbance? The IPCC has attempted to tackle this 
controversial question in its Special Report on Emission Scenarios 
(SRES), which contains a range of possible future climate scenarios 
based on different assumptions regarding economic growth, technological 
developments, and population growth, arguably the three most critical 
determinants of future climate change. Together, the fan of possible 
climate scenarios and the probability distributions of possible climate 
sensitivities determine what policy makers often want to know--by how 
much will it warm in, say, 2100 (or any other time), depending on what 
policies we choose to change emissions scenarios (e.g., Schneider, 
2002).
    The SRES scenarios and other climate change projections depend on 
detailed modeling. The most typical way scientists codify knowledge is 
by constructing models made up of the many subcomponents of the climate 
system that reflect our best understanding of each subsystem. The most 
comprehensive models of atmospheric conditions are three-dimensional, 
time-dependent simulators known as general circulation models (GCMs). 
Because of the complexity and computational costs of GCMs, simpler 
models are often constructed to explore the sensitivity of outcomes to 
plausible alternative assumptions (e.g., Wigley's, testimony to this 
session). The system model as a whole cannot be directly tested before 
the fact--that is, before the future arrives--but it can be verified 
against historical situations that resemble what we believe will be 
analogous to what will occur in the future (see ``Model Validation'' 
below).
    While modeling has become both more complex and more accurate as 
computing abilities have advanced and more is understood about the 
climate problem, scientists still have to deal with an enormous amount 
of uncertainty, as mentioned above. In modeling, a major uncertainty is 
climate sensitivity, the amount by which the global mean surface air 
temperature will increase for a doubling of 
CO2 concentrations from pre-industrial levels. Many 
scientists have done extensive modeling and observational research on 
this subject over the past 20 years, and most agree that climate 
sensitivity probably falls somewhere within the IPCC's range of 1.5-4.5 
+C. However, that old consensus is changing, as several recent studies 
(e.g., Andronova and Schlesinger, 2001; Forrest et al., 2001) have 
estimated that climate sensitivity could be an alarming 6 +C or higher. 
(To give a sense of the magnitude, a 5-7 +C drop in temperature is what 
separates Earth's present climate from an ice age.)
    Model Validation. In the presence of so much uncertainty, how can 
modelers be more confident in their model results? How do they know 
that they have taken into account all economically, ecologically, and/
or climatologically significant processes, and that they have 
satisfactorily ``parameterized'' processes whose size scales are below 
that of their models' grid cells? The answer lies in a variety of model 
validation techniques, most of which involve evaluating a model's 
ability to reproduce--in the case of climate models--known climatic 
conditions in response to known forcings.
    Volcanic eruptions are one good form of model validation. Major 
volcanic eruptions inject so much sulfuric acid haze and other dust 
into the stratosphere that they exert a global cooling influence that 
lasts several years. Such eruptions occur somewhat randomly, but there 
is typically one every decade or so, and they constitute natural 
``experiments'' that can be used to test climate models. The last major 
volcanic eruption, of the Philippine volcano Mt. Pinatubo in 1991, was 
forecast by a number of climate modeling groups to cool the planet by 
several tenths of a degree Celsius. That is indeed what happened.
Figure 2. Predicted and observed changes in global temperature after 
        the 1991 eruption of Mt. Pinatubo
        
        
    Solid curve is derived from measured air temperatures over land and 
ocean surfaces. Broken curves represent climate model runs with 
slightly different initial conditions. In both cases the models 
included the effect of dust injected into the atmosphere by the 
volcanic eruptions. (Source: Hansen et al., 1996.)

    Figure 2 shows a comparison between actual global temperature 
variations and those predicted by a climate model for a period of five 
years following the Mt. Pinatubo eruption. Now, a drop in temperature 
of a few tenths of a degree Celsius is small enough that the observed 
variation just could be an unusual natural fluctuation. However, 
earlier eruptions, including El Chichoon in 1983 and Mt. Agung in 1963, 
were also followed by a marked global cooling of several tenths of a 
degree Celsius. Studying the climatic effects from a number of volcanic 
eruptions shows a clear and obvious correlation between major eruptions 
and subsequent global cooling. Furthermore, a very simple calculation 
shows that the negative forcing produced by volcanic dusts of several 
watts per square meter is consistent with the magnitude of cooling 
following major volcanic eruptions. Viewed in light of these data, the 
graph above suggests that climate models do a reasonably good job of 
reproducing the large-scale climatic effects of volcanic eruptions over 
a time scale of a few years.
    Seasonality provides another natural experiment for testing climate 
models. Winter weather typically averages some fifteen degrees Celsius 
colder than summer weather in the Northern Hemisphere and five degrees 
Celsius colder in the Southern Hemisphere. (The Southern Hemisphere 
variation is lower because a much larger portion of that hemisphere is 
water, whose high heat capacity moderates seasonal temperature 
variations.) Climate models do an excellent job reproducing the timing 
and magnitude of these seasonal temperature variations, although the 
absolute temperatures they predict may be off by several degrees in 
some regions of the world. However, the models are less good at 
reproducing other climatic variations, especially those involving 
precipitation and other aspects of the hydrological cycle. Of course, 
being able to reproduce the seasonal temperature cycle alone--since it 
comes full circle in only one year--does not guarantee that a model 
will accurately describe the climate variations resulting from other 
driving factors (such as increasing anthropogenic greenhouse gas 
concentrations) that will likely occur over decades or centuries. On 
the other hand, the fact that models do so well with seasonal 
variations is an assurance that the models' climate sensitivity is 
unlikely to be off by a factor of 5-10, as some contrarians assert.
    Joint Probability Estimation. The combined effects of uncertainties 
in emissions and uncertainties in climate sensitivity are also known as 
a ``joint probability'' (i.e., sensitivity and emissions varied 
jointly). How do we approach this question of the joint probability of 
temperature rise to 2100 and crossing some ``dangerous'' warming 
threshold, to use the language of the UNFCCC--which, by the way, was 
signed by President Bush in 1992 and ratified by the Senate. Instead of 
using two probability distributions, an analyst could pick a high, 
medium, and low range for each factor and plot the results, as I will 
demonstrate. For example, a glance at Andronova and Schlesinger's 
(2001) calculations shows that the 10 percentile value for climate 
sensitivity is 1.1 +C for a doubling of CO2  (i.e., 4 W/m\2\ 
of radiative forcing). 1.1 +C is, of course, below the IPCC's lower 
limit climate sensitivity value of 1.5 +C. However, this merely means 
that there is a 10 percent chance climate sensitivity will be 1.1 +C or 
less--that is, a 90 percent chance climate sensitivity will be 1.1 +C 
or higher. The 50th percentile result--that is, the value that climate 
sensitivity is as likely to be above as below--is 2.0 +C. The 90th 
percentile value for climate sensitivity from Andronova and Schlesinger 
(2001) is 6.8 +C, meaning there is a 90 percent chance climate 
sensitivity is 6.8 +C or less, but there is still a very uncomfortable 
10 percent chance it is even higher than 6.8 +C--a value well above the 
4.5 +C figure that marks the top of the IPCC's range. Using these three 
values to represent a high, medium, and low climate sensitivity, we can 
produce three alternate projections of temperature over time, once an 
emissions scenario is decided on.
    In Schneider (2003), the three climate sensitivities just explained 
were combined with two SRES storylines: A1FI, the very high emissions, 
fossil fuel-intensive scenario; and A1T, the high technological 
innovation scenario, in which development and deployment of advanced 
technologies dramatically reduces the long-term emissions. This 
comparison pair almost brackets the high and low ends of the 6 SRES 
representative scenarios' range of cumulative emissions to 2100, and 
since both are for the ``A1 world,'' the only major difference between 
them is the technology component. This component should be viewed as a 
``policy lever'' that could be activated through the implementation of 
policies to encourage decarbonization, for example--like the bill 
before this committee. Therefore, studying how different the evolution 
of projected climate is to 2100 for the two different scenarios is a 
very instructive exercise and can help in exploring the different 
likelihoods of crossing ``dangerous'' warming thresholds.
Figure 3. Three climate sensitivities and two scenarios (source: 
        Schneider, 2003)
        
        
    As noted in Figure 3 above, the three climate sensitivities--10th, 
50th and 90th percentiles--designated by Andronova and Schlesinger 
(2001) are combined with the radiative forcings for the A1FI and A1T 
scenarios laid out in the SRES. The dashed horizontal lines in both 
graphs represent the 3.5 +C cut-off--a very conservative number picked 
by me as the threshold value for ``dangerous'' climate change--and the 
blue shaded area marks the extent to which each temperature change 
scenario exceeds that 3.5 +C threshold. As shown, these scenarios 
produce similar projections of warming for the first several decades of 
the 21st century, but diverge considerably--especially in the high-
sensitivity 90th percentile case--after mid-century. The 50th and 90th 
percentile A1FI cases both exceed the threshold of 3.5 +C warming 
before 2100, and the area shaded in blue is much more dramatic in the 
fossil-intensive scenario than the technological innovation scenario. 
In fact, at 2100, when the A1T curves are stabilizing, the A1FI curves 
are still upwardly sloped--implying even greater warming in the 22nd 
century. In order to fully assess ``dangerous'' climate change 
potential, simulations that cover well over 100 years will be 
necessary, since it is widely considered that warming above a few 
degrees Celsius is likely to be much more harmful than changes below a 
few degrees (see Figure 4 below).
    How Long is a ``Long View''? The most striking features of both 
scenarios in Figure 3 are the top (red) lines, which rise very steeply 
above the two lines below them. That is because of the peculiar shape 
of the probability density function for climate sensitivity in 
Andronova and Schlesinger (2001). [For those concerned with the 
technical details, that is because the probability density function has 
a long tail on the right-hand side, representing the possibility that 
aerosols have been holding back not-yet-realized warming and the rise 
in temperature could be much higher than currently expected.] Also 
striking is that both the 10th and 50th percentile results for both the 
A1FI and A1T scenarios don't differ much in 2050, but then diverge 
considerably by 2100. This has led some to declare (erroneously, in my 
view) that there is very little difference in climate change across 
scenarios or even among different climate models with different 
sensitivities. This is clearly wrong, for although both A1FI and A1T 
have emissions, and thus CO2 concentration, projections that 
are not very different for the first several decades of the 21st 
century, they diverge after 2050, as does the temperature response. For 
the 90th percentile results, both the A1FI and the A1T temperature 
projections exceed the ``dangerous'' threshold of 3.5 +C at roughly the 
same time (around 2040), but the A1FI warming not only goes on to 
outstrip the A1T warming, but is still steeply sloped at 2100, implying 
warming beyond 13 +C in the 22nd century, which would undoubtedly leave 
a dramatic legacy of environmental damage for distant posterity and 
great ecological stress for nature.
    Figure 3 shows, via a small number of curves (6 in all), the 
probability of temperature changes over time for three climate 
sensitivity probabilities, but it does not give probabilities for the 
emissions scenarios themselves; only two are used to ``bracket 
uncertainty,'' and thus no joint probability can be gleaned from this 
exercise. This is the next step that needs to be taken by the research 
community. An MIT integrated assessment group (Webster et al., 2003) 
has already attempted to fashion a probability distribution for future 
climate using a series of different models and expert judgments. Like 
other assessments, their work also suggests a wide range of 
possibilities, with some representing quite ``dangerous'' potential 
outcomes. That approach, I predict, will be the wave of the future in 
such analyses, but given the heavy model-dependence of any such 
results, individual ``answers'' will remain controversial and 
assumption-bound for a considerable time to come.
    The likelihood of threshold-crossing is quite sensitive to the 
particular selection of scenarios and climate sensitivities used. 
However, in these bracketing studies, the probability of crossing 
``dangerous'' thresholds of climate change is typically around ten 
percent--a risk society will have to weigh against the costs of climate 
mitigation activities. As will be discussed shortly, that is a high 
risk indeed.
    If conventional economic discounting were applied, some present-day 
``rationalists'' might argue that the present value of damages 
postponed for a century or so is virtually nil. But what if our 
behavior were to trigger irreversible changes in sea levels and ocean 
currents or the extinction of species (on generational time scales)? Is 
it fair to future generations for us to leave them the simultaneous 
legacy of more wealth and severe ecosystem damage? That is the dilemma 
thoughtful analysts of the climate policy debate have to ponder, since 
the next few generations' behaviors will precondition to a considerable 
extent the long-term evolution of the climate and the planetary 
ecosystems.
    Climate Impacts. Let us consider some of the effects that might 
occur in the next century if the SRES emissions do occur. We can use 
models to calculate the climatic consequences of those scenarios 
unfolding, which then allow us to estimate potential impacts of climate 
changes, and in turn, the benefits of avoiding some of those potential 
damages through mitigation and/or other measures.
    Table 1 shows the IPCC's summary of a number of such projected 
impacts. These effects have been consolidated into five major reasons 
for concern and represented graphically, as shown in Figure 4.

                      Table 1.--Projected effects of global warming during the 21st Century
                                     (adapted from IPCC 2001b, table SPM-1)
----------------------------------------------------------------------------------------------------------------
                                                         Examples of Projected Impacts with high confidence of
      Projected Effect         Probability estimate     occurrence (67--95 percent probability) in at least some
                                                                                 areas
----------------------------------------------------------------------------------------------------------------
Higher maximum                  Very likely (90-99%)   Increased deaths and serious illness in older age groups
 temperatures, more hot                                                                          and urban poor
 days and heat waves over                                       Increased heat stress in livestock and wildlife
 nearly all land areas                                                            Shift in tourist destinations
                                                                  Increased risk of damage to a number of crops
                                                           Increased electric cooling demand and reduced energy
                                                                                             supply reliability
----------------------------------------------------------------------------------------------------------------
Higher minimum                  Very likely (90-99%)       Decreased cold-related human morbidity and mortality
 temperatures, fewer cold                                    Decreased risk of damage to a number of crops, and
 days, frost days and cold                                                             increased risk to others
 waves over nearly all land                                Extended range and activity of some pest and disease
 areas                                                                                                  vectors
                                                                                  Reduced heating energy demand
----------------------------------------------------------------------------------------------------------------
More intense precipitation      Very likely (90-99%)        Increased flood, landslide, avalanche, and mudslide
 events                              over many areas                                                     damage
                                                                                         Increased soil erosion
                                                             Increased flood runoff increasing recharge of some
                                                                                            floodplain aquifers
                                                             Increased pressure on government and private flood
                                                                          insurance systems and disaster relief
----------------------------------------------------------------------------------------------------------------
Increased summer drying              Likely (67-90%)                                      Decreased crop yields
 over most mid-latitude                                Increased damage to building foundations caused by ground
 continental interiors and                                                                            shrinkage
 associated risk of drought                                       Decreased water resource quantity and quality
                                                                                  Increased risk of forest fire
----------------------------------------------------------------------------------------------------------------
Increase in tropical            Likely (67-90%) over   Increased risks to human life, risk of infectious disease
 cyclone peak wind                        some areas                             epidemics and many other risks
 intensities, mean and peak                            Increased coastal erosion and damage to coastal buildings
 precipitation intensities                                                                   and infrastructure
                                                           Increased damage to coastal ecosystems such as coral
                                                                                            reefs and mangroves
----------------------------------------------------------------------------------------------------------------
Intensified droughts and             Likely (67-90%)       Decreased agricultural and rangeland productivity in
 floods associated with El                                                     drought- and flood-prone regions
 Nino events in many                                   Decreased hydro-power potential in drought-prone regions
 different regions
----------------------------------------------------------------------------------------------------------------
Increased Asian summer               Likely (67-90%)     Increase in flood and drought magnitude and damages in
 monsoon precipitation                                                              temperate and tropical Asia
 variability
----------------------------------------------------------------------------------------------------------------
Increased intensity of mid-       Uncertain (current                   Increased risks to human life and health
 latitude storms                    models disagree)               Increased property and infrastructure losses
                                                                         Increased damage to coastal ecosystems
----------------------------------------------------------------------------------------------------------------

Figure 4--Reasons for concern about climate change impacts (source: 
        IPCC Working Group 2 Third Assessment Report, figure SPM-2)
        
        
    In Figure 4 above, the left part of the figure displays the 
observed temperature increase up to 1990 and the range of projected 
increases after 1990, as estimated by IPCC Working Group I (IPCC, 
2001a). The right panel displays conceptualizations of five reasons for 
concern regarding climate change risks evolving through 2100. White 
indicates neutral or small negative or positive impacts or risks, 
yellow indicates negative impacts for some systems, and red means 
negative impacts or risks that are more widespread and/or greater in 
magnitude. This figure shows that the most potentially dangerous 
impacts (the red colors on the figure) typically occur after a few 
degrees Celsius of warming--thus, my use of 3.5 +C as a tentative 
``threshold'' for serious climate damages in Figure 3 is very 
conservative. (The European Union has suggested the ``dangerous'' 
threshold is about 2 +C.) The risks of adverse impacts from climate 
change increase with the magnitude of climate change.
    Despite uncertainties surrounding emissions scenarios and climate 
sensitivity, the IPCC has projected that, if its latest estimate that 
the Earth's atmosphere will warm somewhere between 1.4 and 5.8 +C by 
2100 is correct, likely effects will include: more frequent heat waves 
(and less frequent cold spells); more intense storms (hurricanes, 
tropical cyclones, etc.) and a surge in weather-related damage; 
increased intensity of floods and droughts; warmer surface 
temperatures, especially at higher latitudes; more rapid spread of 
disease; loss of farming productivity and/or movement of farming to 
other regions, most at higher latitudes; species extinction and loss of 
biodiversity; and rising sea levels, which could inundate coastal areas 
and small island nations (see Table 1).
    The threat of rising sea levels has been studied in great detail. 
It is thought that warmer atmospheric temperatures would lead to 
warming of ocean water (and corresponding volumetric expansion) until 
the heat was well-distributed throughout the oceans--a mixing time 
known to be on the order of 1,000 years. Instead of only up to a meter 
of sea level rise over the next century or two from thermal expansion 
of warmed ocean waters--and perhaps a meter or two more over the five 
or so centuries after that--significant global warming would likely 
trigger nonlinear events like a deglaciation of major ice sheets near 
the poles. That would cause many additional meters of rising seas for 
many millennia, and once started, might not be reversible on the time 
scale of thousands of years.
    It is important that scientists continue to develop stronger models 
and probe the issue of climate sensitivity, as improvements in the 
science will lead to improvements in our understanding of the potential 
impacts of various levels of temperature change.
    In What Units Can We Measure Climate Damage? Schneider, Kuntz-
Duriseti, and Azar (2000) have argued that the best way to estimate the 
full extent of the climate change-induced damages described above is by 
examining not just monetarily-quantifiable (``market'') damage, but the 
``five numeraires'': monetary loss (market category), loss of life, 
quality of life (including coercion to migrate, conflict over 
resources, cultural diversity, loss of cultural heritage sites, etc.), 
species and/or biodiversity loss, and distribution/equity. Assessing 
climate impacts in all these categories should ensure a fairer, more 
accurate assessment of the actual costs of global warming.
    The last numeraire, the issue of equity in climate change, is, and 
will likely continue to be, contentious. Climate change inequality will 
likely come in two forms. First, it will produce inequity in effects. 
Some countries or sectors within countries will benefit from a certain 
degree of warming, whereas others will be harmed by it. The developed 
countries, who are responsible for most of the greenhouse gases emitted 
into the atmosphere thus far may not be affected as much as the 
developing countries for two reasons: first, there is usually higher 
adaptive capacity in richer, cooler countries than in poorer, warmer 
ones. Second, developing countries that have not yet experienced the 
economic fruits of an industrial revolution and want their chance to 
emit and industrialize fear that policies to restrict emissions will 
deny them their ``fair share'' of the atmospheric commons to use--quite 
literally--as a waste dump. One strategy to solve this problem is 
``technology leapfrogging,'' the transfer or development of cleaner 
technologies to developing countries on a much-accelerated time 
schedule (relative to the developments that have emerged over a century 
in now-rich countries).
    Moreover, as there are disparities in countries' abilities to pay 
for global warming-related problems, once again, the developing 
countries will be affected more yet have less of an ability to pay than 
the rich nations. While I agree it is essential to deal with climate 
policy at home--and thus personally applaud this bill before the 
committee today--we will have to join with other countries to fashion 
joint solutions in the near future if we are to make progress on the 
climate change problem.
    Nature Is Already Responding. Another numeraire mentioned above was 
the loss of biodiversity. Very recent studies (e.g., Root et al., 2003; 
Parmesan and Yohe, 2003) have shown that nature is already responding 
to climate trends of the past several decades. Figure 5 (below), for 
example, shows the activities of many plants and animals--such as the 
flowering of trees and the migrating of birds in the spring--have been 
occurring earlier due to observed climate trends. That warmer weather 
would make flowers bloom earlier is hardly surprising, but that 
``only'' 0.6 +C of warming to date has already caused a statistically 
significant ``discernible impact'' on plants and animals is surprising. 
Moreover, it is sobering to consider what major movements--and 
extinctions--would likely take place in plant and animal communities if 
the climate changes by several degrees or more.
Figure 5. Frequency of species and groups of species with a 
        temperature-related trait changing by number of days in 10 
        years for data gathered primarily since 1960
        
        
    The arrow indicates the mean and the ``x'' indicates no data were 
tabulated for species showing no clear trait changes. This is a highly 
statistically significant result demonstrating that there has been a 
discernible impact of recent climate trends on plants and animals. 
Their vital activities that are linked to temperature are occurring 
earlier, in concert with global warming trends. (Source: Root et al., 
2003.)

    Another clear climate impact is the retreat of mountain glaciers. 
This problem goes beyond just the disruption of scenic beauty as 
glaciers in places like Glacier National Park continue to disappear; it 
can be damaging to societies that are flooded during the glacier-
melting stage and will later suffer from lack of water as their current 
supplies disappear with the glaciers. Figure 6 shows the dramatic 
disappearance of Mt. Kilimanjaro's glaciers, which have decreased in 
size by 80-90 percent relative to 100 years ago.
Figure 6. What will happen to the snows of Kilimanjaro?


    The extent of ice cover on Mt. Kilimanjaro decreased by 81 percent 
between 1912 and 2000. Disappearing paleoclimate archives such as this 
are a priority target of the Global Paleoclimate Observing System 
currently being proposed by the Past Global Changes (PAGES) scientists.

    Climate Surprises? The IPCC and others have stated that 
``dangerous'' climate change, including surprises, is more likely to 
occur with more than a few degrees Celsius of additional warming. 
Surprises, better defined as ``imaginable abrupt events'', could 
include deglaciation and/or the alteration of ocean currents, the most 
widely-used example of the latter being a slowdown of the Thermohaline 
Circulation, or THC, system in the North Atlantic Ocean. Ecosystems, 
especially those already stressed by land use pressures, are 
particularly vulnerable to rapid climate changes.
    Estimating climate damages that are expected to occur gradually and 
their effects is simple relative to forecasting ``surprise'' events and 
their consequences. But rather than being ignored as unlikely, 
surprises and other irreversibilities like plant and animal extinctions 
should be treated like other climate change consequences by scientists 
performing risk assessments, where risk is defined as probability x 
consequence. While the possible consequences of climate change have 
been discussed thoroughly, they are often not accompanied by 
probabilities. The probability component of the risk equation will 
entail subjective judgment on the part of scientists, but this is far 
preferable to overlooking the risk equation entirely.
    Policymakers will be better able to determine what is ``dangerous'' 
and formulate effective legislation to avoid such dangers if 
probabilities appear alongside scientists' projected consequences. 
These probabilities and consequences will vary regionally. In general, 
temperature rises are projected to be greatest in the subpolar regions, 
and to affect the polar winter more dramatically than the summer. 
Hotter, poorer nations (i.e., developing nations near the equator) are 
expected to suffer more dramatic effects from climate change than their 
developed neighbors in the North. This is partly due to the lower 
expected adaptive capacities of future societies in developing nations 
(when compared with their developed country counterparts), which depend 
on their resource bases, infrastructures, and technological 
capabilities. This implies that damages may be asymmetrically felt 
across the developed/developing country divide. The scenario in which 
climate change brings longer growing seasons to the rich northern 
countries and more intense droughts and floods to the poor tropical 
nations is clearly a situation ripe for increasing international 
tensions and could cause developing nations to feel increasing 
resentment towards the most-polluting nations in the twenty-first 
century. That scenario has clear security implications for the United 
States.
    Regardless of the different levels of vulnerability and adaptive 
capacity that future societies are expected to have and the need for 
regional-level assessments that that implies, all people, governments, 
and countries should realize that ``we're in this together.'' In all 
regions, people's actions today will have long-term consequences. Even 
if humanity completely abandons fossil fuel emissions in the 22nd 
century, elevated CO2 concentrations are projected to remain 
for a millennium or more. The surface climate will continue to warm 
from this greenhouse gas elevation, with a transient response of 
centuries before an equilibrium warmer climate is established. How 
large that equilibrium temperature increase is depends on both the 
final stabilization level of the CO2 and the climate 
sensitivity.
    Implications for Climate Policy Choices. In the face of such 
uncertainty, potential danger, and long-term effects of present 
actions, how should climate change policy be confronted? As discussed 
previously, climate change, like many other complex socio-technical 
issues, is riddled with ``deep uncertainties'' in both probabilities 
and consequences. They are not resolved today and may not be resolved 
to a high degree of confidence before we have to make decisions 
regarding how to deal with their implications. With imperfect, 
sometimes ambiguous, information on both the full range of climate 
change consequences and their associated probabilities, decision-makers 
must decide whether to adopt a ``wait and see'' policy approach or 
follow the ``precautionary principle'' and hedge against potentially 
dangerous changes in the global climate system. Since policymakers 
operate on limited budgets, they must determine how much to invest in 
climate protection versus other worthy improvement projects--like new 
nature reserves, clean water infrastructure and other health 
improvement, and better education.
    Ultimately, the decision on whether or not to take action on 
climate change entails a value judgment on the part of the policymaker 
regarding what constitutes ``dangerous'' climate change, ideally aided 
by complete risk assessments provided by scientists. Cost-benefit 
analyses (CBAs) are also useful in deciding the ifs and whats of 
climate change policy, but uncertainties and the need for multiple 
metrics (e.g., the ``five numeraires'') make this exercise difficult as 
well, especially when attempting to estimate the costs of surprise and 
other catastrophic events.
    Any policies that are implemented should encourage, and possibly 
even go so far as to subsidize, technological change. Encouraging 
technological change through energy policies, in particular, is of 
critical importance when addressing climate change. As Figure 3 shows, 
alternate energy-technology scenarios could dramatically lower the risk 
of ``dangerous'' climate change.
    Is It Really Too Expensive To Mitigate Global Warming? Christian 
Azar and I (Azar and Schneider, 2002) developed a simple economy model 
and estimated the present value (discounted to 1990, expressed in 1990 
USD, and assuming a discount rate of five percent per year) of the 
costs to stabilize atmospheric CO2 at 350 parts per million 
(ppm), 450 ppm, and 550 ppm to be 18 trillion USD, 5 trillion USD, and 
2 trillion USD, respectively. Obviously, 18 trillion USD is a huge 
cost; the output of the entire global economy in 1990 amounted to about 
20 trillion USD. Seen from this perspective, these estimates of the 
costs of abatement tend to create the impression that we would, as 
critics suggest, have to make draconian cuts in our material standards 
of living in order to reduce emissions and achieve the desired levels 
of CO2 concentration. These same critics view the cost 
estimates as unaffordable and politically impossible.
    However, viewed from another perspective, an entirely different 
analysis emerges. In the absence of emission abatement and without 
factoring in any damages from climate change, GDP is assumed to grow by 
a factor of ten or so over the next 100 years, which is a typical 
convention used in long-run modeling efforts. (The plausibility of 
these growth expectations is not debated here, but the following 
analysis will show how GDP is expected to grow with and without climate 
stabilization policies.) If the 350 ppm target were pursued, the costs 
associated with it would only amount to a delay of two to three years 
in achieving this aforementioned tenfold increase in global GDP. Thus, 
meeting a stringent 350 ppm CO2 stabilization target would 
imply that global incomes would be ten times larger than today by April 
2102 rather than 2100 (the date the tenfold increase would occur for 
the no-abatement-policies scenario). This trivial delay in achieving 
phenomenal GDP growth is replicated even in more pessimistic economic 
models. These models may be very conservative, given that most do not 
consider the ancillary environmental benefits of emission abatement 
(see Figure 7 below).
Figure 7. Global income trajectories under business-as-usual (BAU) and 
        in the case of stabilizing the atmosphere at 350 ppm, 450 ppm, 
        and 550 ppm
        
        
    Observe that we have assumed rather pessimistic estimates of the 
cost of atmospheric stabilization (average costs to the economy assumed 
here are $200/ton Carbon (tC) for 550 ppm target, $300/tC for 450 ppm, 
and $400/tC for 350 ppm) and that the environmental benefits in terms 
of climate change and reduction of local air pollution of meeting 
various stabilization targets have not been included. (Source: Azar & 
Schneider, 2002.)

    Representing the costs of stringent climate stabilization as a few 
short years of delay in achieving monumental increases in wealth should 
have a strong impact on how policymakers, industry leaders, and the 
general public perceive the climate policy debate. Similar results can 
be presented for the Kyoto Protocol: the drop in GDP below ``baseline'' 
levels that would occur if the Kyoto Protocol were implemented ranges 
between 0.05 percent and 1 percent, depending on the region considered 
and the model used (see IPCC Working Group III, chapter 8, IPCC 2001c, 
p. 537-538). The drops in the growth rates for OECD countries over the 
next ten years would likely fall in the range of 0.005-0.1 percent per 
year below baseline scenario projections under the Kyoto Protocol. (It 
should be kept in mind that the uncertainties about baseline GDP growth 
projections are typically much larger than the presented cost-related 
deviations.) Returning to the analysis Azar and I did, assuming a 
growth rate of two percent per year in the absence of carbon abatement 
policies, implementation of the Kyoto Protocol would imply that the 
OECD countries would get 20 percent richer (on an annual basis) by June 
2010 rather than January 2010, assuming the high-cost abatement 
estimate.
    Similar statements could well be made about the costs associated 
with this bill that is before the Committee. Although I have not 
analyzed it myself, I strongly suspect that the loss of GDP from the 
costs incurred as a result of implementing this measure would be such a 
small fraction of typically-projected U.S. GDP growth rates that only 
months of delay in growth would occur, nowhere enough to prevent large 
increases in personal income from occurring. Thus, this bill is likely 
to be an inexpensive ``insurance premium'' to slow down global warming 
and lower the likelihood of ``dangerous'' climate impacts.
    Whether the costs mentioned are big or small is, of course, a value 
judgment, but in any case, it is difficult to reconcile the long-term 
climate benefits of a short-term delay in GDP growth with the strident 
rhetoric of contrarians like Lindsey (2001) who states in a speech to a 
colloquim on Science and Technology Policy (organized by the American 
Association for the Advancement of Science, or AAAS) that ``the Kyoto 
Protocol could damage our collective prosperity and, in so doing, 
actually put our long-term environmental health at risk'' (p.5). Others 
have made similar statements about this bill, and they have been 
refuted by careful economic analyses (Pizer and Kopp, 2003; Paltsev et 
al., 2003). Clearly, such balanced quantitative economic assessments, 
rather than pessimistic and often politically-motivated exaggerations 
should guide the evaluations of making bills like this one the laws of 
the land.
    I thank the Committee for asking for my views on this important 
piece of legislation.
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    The Chairman. Thank you very much, Dr. Schneider.
    Dr. Busalacchi, could I refer back to your statement? I 
think it's a very strong and compelling one. ``Despite 
uncertainty, there's widespread agreement that the observed 
warming is real and particularly strong within the last 20 
years.'' Your statement if full of very strong assertions that 
we have a serious problem, and yet your answer is, well, all we 
need to do is keep monitoring and observing. ``It's imperative 
that the Nation continue directing resources toward better 
observing, modeling, and understanding of what form future 
changes in climate and climate variability may take, potential 
positive and negative impacts of these changes on the human 
ecosystem, and how society can best mitigate''----
    Doctor, your recipe belies the problem. Don't you think we 
should at least take some modest steps toward reducing these 
impacts that you so graphically and dramatically describe, 
rather than continue monitoring and observing?
    Dr. Busalacchi. I'm trying to draw a distinction between 
myself, as a physical scientist--trying to give you the 
assessment of the system. And you ask me now, as a parent, as a 
citizen, then I give you a different answer. All right? So I am 
trying to--I'm not trying to play games. OK?
    The Chairman. Well, as a parent and as citizen, perhaps we 
deserve the benefit of your view.
    Dr. Busalacchi. I want an environment, I want quality of 
life for my grandchildren to be better than it is for me right 
now. We----
    The Chairman. And better than it's projected to be under 
the present circumstances.
    Dr. Busalacchi. That's correct. And we are not--right now, 
we, collectively, are not on a path to give my grandchildren 
and your grandchildren improved quality of life.
    So now when we're talking about policy actions, yes, I 
mean, the time has come to take action. The burden of proof 
there within the scientific community is there. Outside this 
room, quite oftentimes, the pulse of the scientific community 
is oftentimes described as--you have a collection of scientists 
over here that are pro-global-warming, and a collection of 
scientists over here that are skeptical. That's not the way the 
situation is, in reality. It's actually like--the burden of 
proof is way over on this side that we have a problem, this 
planet has a fever, and it is time to be taking action.
    The Chairman. And could I re-emphasize your point, going 
back to what Dr. Schneider was mentioning. If this hearing, 15 
years ago, in the 1980s, we would have had basically that 
balance you're talking about. Right?
    Dr. Busalacchi. Yes.
    The Chairman. I've been around long enough to know that. 
And the preponderance keeps shifting in the direction of the 
conclusions that you reach in your statement.
    Dr. Busalacchi. The evidence is there. The time is now to 
take action.
    The Chairman. Well, I thank you for that statement.
    Also, thank you for all your good works by the way. Dr. 
Wigley, we've had witnesses and writings and other things, 
``Look, back 40,000 years ago, or whatever it was, we had an 
ice age, and Earth almost froze. Look, you guys are not looking 
at the long-term problem here.'' Now, that's one reason why I 
was very interested in your chart, just going back to 1870. But 
there are many people who are opposed to us taking any actions, 
who will claim that this is just one of those accidents of 
history, using the ice age as an example.
    Dr. Wigley. Yes, I don't deny that there are natural 
changes, but the changes that are projected over the next 
hundred years are far, far greater than anything that's 
occurred over the last 10,000 years, at least. And, as Stephen 
Schneider pointed out, there's very strong evidence that the 
present warming of the last 20 to 50 years is totally 
unprecedented in the last 2,000 years.
    So, you know, we're talking about moving into totally 
unknown territory. Forty-thousand years ago, you know, if you 
were a mammoth, then maybe you were happy. But I don't think 
there were any industrialized nations or human beings, you 
know, coping with water resources and agriculture at that time. 
You know, we're in a different situation nowadays, and these 
changes really are unprecedented. And they're in a direction 
where immediate action of some form is absolutely required.
    The Chairman. You know, this proposal of Senator 
Lieberman's and mine has been described as the end of Western 
civilization as we know it.
    [Laughter.]
    The Chairman. Would you perhaps comment, perhaps all three 
of you, very briefly, as to--I'm sorry to say, it's a very 
modest measure that it, indeed, is. I don't know if you want to 
comment, Dr. Busalacchi, but perhaps you would.
    Dr. Busalacchi. Just following with what I said last time, 
it's time to be moving forward. Even if it is modest steps, 
they're steps forward rather than no steps at all. And so we 
need to be advancing on this issue, plain and simple.
    The Chairman. Thank you, sir.
    Dr. Wigley?
    Dr. Wigley. Yes, or course. I agree.
    The Chairman. And if you had a magic wand, you would want 
us to do the following.
    Dr. Wigley. The proposals you've made, I think, are both 
beneficial to the environment and potentially beneficial to the 
economy. As with the Kyoto Protocol, they are only first steps 
in what is a century timescale problem, but they seem to be 
very positive first steps. And as the European Union is doing, 
I mean, the only way to approach this problem is learning by 
doing. And, you know, the only way to learn by doing is to do 
first, and then benefit from that experience, and then decide 
what to do on a longer timescale.
    The Chairman. Thank you.
    Dr. Schneider, would you respond? And also, would you care 
to comment--because you were highlighted by Senator Inhofe as 
being a critic of the Intergovernmental Panel on Climate Change 
Results, maybe you'd like to clarify your comments there.
    Dr. Schneider. Yes, thank you.
    You began your question to us by noting that rhetorical 
excess is not absent from the climate debate either, and we're 
all used to it.
    The unfortunate problem is that when you have a complex 
issue of this type, what happens is you get one scientist who 
says ``good for you'' and one ``the end of the world,'' and 
they get equal time in the op-ed pages, it's very easy for 
people to be confused about this complexity.
    But as my colleagues have said earlier, there is very 
little debate among the mainstream scientific community over 
the substantial likelihood that humans are already in the game 
and will, in fact, become increasingly strong over time.
    Looking backward 40,000 years, in fact, is very important. 
It's the backdrop against which we calibrate our understanding 
to go forward. There are no analogies from the past about what 
will happen in the future, because there weren't six billion 
people tightly locked in national boundaries, they didn't have 
a billion of them at nutritional margins, they didn't have the 
land-use pressures they've put on, nor the dependencies on 
expected climate to feed that many people, for example. So as a 
result of that, the situation is different, and we go backward 
to try to explain how the thing works. Then we look at what 
humans might do and what policies such as those that you're 
discussing now might do in reducing the pressure we put on. And 
we ask those questions differentially. And I think that's the 
appropriate mode to go in.
    And the rhetorical excesses will go on, because those are 
often by people who are--let's be very blunt--who are special 
interests in protecting certain groups who are afraid that the 
kinds of actions we do remind us that the atmosphere is not a 
free sewer, and if our tailpipes are going to be reducing what 
we dump in it, it will probably have to have a charge 
associated with it; otherwise, it won't work. It's very 
difficult to expect people to stop at red lights or at stop 
signs if they were voluntary. And as a result of that, one has 
to look toward rules that are fair and effective. And I applaud 
the Committee for doing that.
    You asked one other thing at the end, and I'm not certain I 
remember. If you could again--my jet lag--I will try and answer 
that, because I was answering the first part of your questions.
    The Chairman. Senator Inhofe----
    Dr. Schneider. Oh, yes. Quoting me as saying that there's 
uncertainty is fine. That's, you know, a correct quote. In 
fact, for the last IPCC, Richard Moss and I were somewhat 
unaffectionately dubbed ``the uncertainty cops,'' because we 
wrote the guidance paper that was rather aggressive in 
insisting that for policymakers to find statements from 
scientists useful, they wanted to have probabilities attached 
so you'd know how to make resource decisions in the face of 
scarcity by knowing the relative likelihood of various 
outcomes. And I clearly believe that uncertainty is necessary.
    I'm also, like any scientist, skeptical of any result, new 
and old, and we're always continuously refining, which is 
precisely how the community works. On the other hand, the more 
we try to prove something wrong and the less we can do it, the 
more we begin to believe that there's a substantial likelihood 
that it's true, and that's precisely where the mainstream 
scientific community is sitting on this.
    What he quoted, unfortunately, was not accurate. He quoted 
me as saying that the IPCC was not peer-reviewed. In fact, the 
IPCC is mega-peer-reviewed. I edit a peer-reviewed journal, 
``Climatic Change,'' and I am very envious of the degree of 
peer-review IPCC or the National Research Council is able to 
obtain.
    I get two or three scientists to comment on a paper, and 
then usually the comments are sufficiently critical that we 
have to have it rewritten, and then maybe I'll bring in a 
fourth person to try to give advice on whether it's a balanced 
response. And I, like a judge, have to make a decision as to 
what's enough.
    In the case of the IPCC, it was almost odious for those of 
us who were lead authors, because not only did we have peer-
review comments from hundreds and hundreds of people and from 
many, many different nations and from all stakeholder groups, 
but we had to prepare, in our revisions, responses to review 
editors saying how we dealt with each comment. We couldn't just 
dismiss it, because, you know, in the coffee klatch around the 
room, we said, ``Well, we don't like this guy, so we don't 
trust him. We're going to ignore it.'' There had to be real 
reasons written down to justify to the review editors any peer 
comment that was ignored, and we had to explain how we dealt 
them and why and that we didn't overreact. And this didn't just 
happen once, it happened three times.
    So for a pro bono operation, it was absolutely amazing that 
the scientific community responded by putting in so many 
personal hours working on this project with this kind of peer 
review and the requirement that it be justified how you 
respond. And I'm personally very proud of my colleagues for 
having done that, and appreciate your noticing the credibility 
of the IPCC and the National Academy. And those people who 
impune it either don't know about it or have other convenient 
personal reasons for making charges that are, frankly, false.
    The Chairman. Senator Lautenberg?
    Thank you, Dr. Schneider.
    Senator Lautenberg. Thanks, Mr. Chairman.
    Mr. Wigley, you were included in Senator Inhofe's 
commentary on the floor of the U.S. Senate. He repeatedly 
quoted from your writings, stating that you believe that 
science in support of climate change is unsubstantiated. Is 
that a correct appraisal of what you said?
    Dr. Wigley. No, that's certainly not a correct appraisal at 
all. I believe he implied that some work that I published with 
a co-author of mine a year or so ago suggested that the science 
behind climate change was unstable and, therefore, could not be 
trusted. And the reason for making that statement was because 
they're projections made by Intergovernmental Panel on Climate 
Change. In their most recent report, it was different fairly 
substantially from the projections made in the previous report 
of 1995/96.
    In the paper that we published, we tried to break down the 
reasons for those changes into a number of different factors, 
and the primary reason was not related to our understanding of 
the climate system, not related to the development or lack of 
development of climate models. It was related to our 
understanding of how people globally would respond to the 
emissions of sulphur dioxide. Now, sulphur dioxide produces 
more particles, called aerosols, in the atmosphere, which have 
a cooling effect. And in the earlier second assessment report 
and projections of the emissions of sulphur dioxide, the 
pollution effect of those emissions was not accounted for, and 
so their emissions rose very substantially and caused a 
substantial global cooling, offsetting the warming due to 
greenhouse gases.
    Senator Lautenberg. Dr. Wigley, I assume that your answer 
was no.
    Dr. Wigley. Yes, absolutely.
    [Laughter.]
    Senator Lautenberg. Thank you very much.
    The science is befuddling to those of us who only think 
about war and peace and budgets and things of that nature. I 
have so much respect for all three of you for the presentation 
that you've made and for the work that you've done.
    Let me ask you a question. If the United States was to join 
in the Kyoto principles, could you see an impact from that 
coming in fairly short-term, if we were to sign on and join in 
the pact on Kyoto? Anyone?
    Dr. Wigley. Well, I'm sure that there would be an impact if 
we were to sign on. I mean, certainly it would allow 
multilateral trading, particularly with the European Community, 
and that would be a positive benefit, because the trading 
scheme is a way of making the economics much more efficient.
    There is a small avenue for some sort of trading through 
what's called the ``clean development mechanism,'' but that's 
not really directed toward countries like the United States.
    So there would be an advantage. It would broaden the 
playing field and make the global situation economically more 
efficient.
    Senator Lautenberg. Dr. Schneider?
    Dr. Schneider. Yes. That's another area where there has 
been a lot of distortion. People suggest that the only thing we 
do in the next hundred years is Kyoto, that in 2100 the world 
will only be two-tenths of a degree cooler than it otherwise 
would have been, so why have we spent all this money to get the 
same amount of warming 4 years later?
    No one in the scientific community that has been involved 
in these credible assessments, like IPCC or the National 
Research Council, has ever said that Kyoto was the final and 
only step. In fact, it has been clear, again and again and 
again, in report after report after report, science, over the 
past 25 years, and, in testimony before this Committee and 
others, that in order to keep the atmospheric concentrations of 
carbon dioxide, for example, below doubling above pre-
industrial level, that would have to cut something on the 
order--and Tom has done many calculations on this, himself--of 
about 50 percent by mid-century for typical businesses, and 
we'd have to go down to nearer to zero in the next century.
    The good news is, we have a century to do that. The bad 
news is, the longer and longer we delay the process of 
beginning to develop the relative carbon-free energy at 
reasonable prices, the more expensive it becomes to do it when 
you have to do it decades from now.
    So the answer I would give you to Kyoto, or, as well, to 
this bill, is while there will be skeptics and critics who will 
say that its overall impact on global warming reduction is 
relatively modest, that's true in the short-run. But, you know, 
all journeys begin with small steps. And if one does not begin 
the process of sending positive incentives to the incredible 
industrial and technological machinery in the United States and 
other countries, it'll be that much longer before we invent the 
low-cost technologies that are necessary to deal with the 
problem over time, when the really big cuts start to occur 
decades from now.
    So getting started in a cost-effective manner, and sending 
the right incentive signals, is very important. And that's why 
I personally wish that we would be involved with other nations 
through the Kyoto process. In fact, because of the presence of 
the United States during the negotiations in the 1990s and 
early 2000s, Kyoto added a number of mechanisms, so-called 
``flexibility mechanisms,'' that allow us to have much lower-
cost trading and other actions than otherwise would happen. So 
I think we've already taken long, good steps in that direction.
    This bill reflects those very components.
    Senator Lautenberg. Mr. Chairman, one other question.
    I mentioned before that I had been to Antarctica and saw 
this incredible reservoir of fresh water with 70 percent of all 
the fresh water in the world stored there. It was being 
dissipated as the cracks and fissures and float-offs, if I can 
call them that, occurred because it just melts into the sea. 
The consequence down the road would be higher water levels and 
just loss of that precious resource.
    In that visit, I went to Australia also, and there was 
conversation about how children going to the beach had to wear 
hats and full bathing suits and everything else, because 
Australia has the highest rate of melanoma skin cancers of any 
country, developed country, in the world.
    More recently, I read something about the hole in the ozone 
layer, and that it was seen to be closing. Is that an 
observation that any of you have heard about? I read it in the 
paper, and I just wanted to know if--well, what might be 
causing that? Is there some improvement that we're making that 
would permit that to happen?
    Dr. Busalacchi. There have been the comments in the press 
about it closing, but I think what it showed is this is--that 
was another example of natural variability going on in the 
region, experiencing some extremes, but you can't point to any, 
sort of, human influence on that.
    Let's go back to your last question, though. I think we 
really can have an impact in the short-term, especially with 
respect to short-lived species, be it black carbon, the 
aerosols, even methane. And I think the Montreal Protocol 
taught us that we can work in the international context and 
have a positive impact on the environment.
    Senator Lautenberg. Thank you.
    The Chairman. Thank you very much, all of you.
    Thanks.
    Senator Nelson?

                STATEMENT OF HON. BILL NELSON, 
                   U.S. SENATOR FROM FLORIDA

    Senator Nelson. Thank you, Mr. Chairman. And thank you for 
your devotion to this issue and the fact that you won't let it 
go. I appreciate your leadership.
    I tried to offer some leadership on this issue in the mid-
1990s as the elected insurance commissioner of Florida. I tried 
to point out that, of all places, that Florida was going to be 
one of the ones that was going to be affected the most by the 
rising of the sea levels, by the increased temperatures, and, 
therefore, the increased ferociousness of storms, as well as 
pestilence. And I, particularly in the mid-1990s, reached out 
to the insurance companies to try to get them to understand 
that it was in their interest to start planning, and I would 
hit a solid brick wall.
    I am heartened to see that one of your people testifying is 
from Swiss Re today, and it's fairly strong testimony. And 
there was some indication, even back in the late 1990s, that 
some of the European insurance companies were starting to come 
around, but the American insurance companies didn't want to 
talk about it.
    I'd like your comments about this.
    Dr. Busalacchi. Well, Senator, as a graduate of Florida 
State, I remember your efforts at that time. I think the 
Southeast is a particularly vulnerable part of the country. I 
can't say anything about the recent passage of Isabel being due 
to global warming, but it's a very good sort of harbinger or 
lessons learned of potential things to come because of the 
extreme damage due to storm surge and floods as a result that 
we could expect from global warming.
    Basically, as we pump more energy into the system, the way 
our system, our planet, expresses itself is as a result of the 
severe events, storms, and floods. So we expect an 
intensification of the hydrological cycles. So we have 
precipitation, more intense precipitation. And where that drier 
air descends, we expect semi-arid regions to become more arid.
    So, I, again, can't say that a hurricane, that hurricane, 
was due to global warming, but, sort of, the storm-surge 
examples, a lot of what we went through in this area, is 
something that may be signs of things to come.
    Senator Nelson. Well, do you think the insurance companies 
are waking up to reality?
    Dr. Busalacchi. I think we'll defer to our speaker--but 
definitely even in--with respect to the hurricanes in Florida, 
yes, most definitely, the insurance industry is very much in 
tune to how, let's say, climate variability and whether or not 
we have an El Ninno event affects landfall hurricanes or 
whether or not they go out to sea. So the insurance community 
is much more in tune to where we are with climate science, more 
than many of us realize.
    Senator Nelson. Most of our development is along the coast. 
And, of course, with the rising of the sea, that then threatens 
property. And you would think that the insurance companies 
would be first in line, but they didn't want to talk about it.
    Dr. Busalacchi. No, I think things have changed drastically 
in the last----
    Senator Nelson. And what has caused that change in the 
CEO's minds of insurance companies?
    Dr. Busalacchi. I wouldn't dare speak for the mind of a 
CEO.
    [Laughter.]
    Senator Nelson. In your opinion. In your opinion.
    Dr. Busalacchi. Some of the very points you mentioned to. 
They are extremely vulnerable, and we now know that the state 
of the climate system is not constant and stationary. It is 
changing, and we actually now have an understanding of how it's 
changing, and so we can take our knowledge of this change and 
put it to good use, and prevent those losses, both for the 
people in those houses and the monetary losses for the 
companies.
    Senator Nelson. Would you say that the scientific community 
is virtually 95 percent now in a consensus that global warming 
is real?
    Dr. Busalacchi. Yes. Maybe it was before you came in----
    Senator Nelson. Yes.
    Dr. Busalacchi.--I made the remark that the press portrays 
our problem has having the community over here in favor of 
global warming, a community over here as skeptics.
    Senator Nelson. And that's not the way it is.
    Dr. Busalacchi. No, it's like this.
    Senator Nelson. It's 95 to 5.
    Dr. Busalacchi. Way over here, that global warming is real, 
and it's time now to take action.
    Senator Nelson. Do the 5 percent really believe it, or are 
they paid to say that?
    Dr. Busalacchi. Yes.
    [Laughter.]
    Senator Nelson. That's a good answer. I ought to learn from 
that one.
    [Laughter.]
    Senator Nelson. Well, I'll tell you, you know, this is just 
as simple as anything to me, and maybe it's because I've always 
lived on the coast. But, I'll tell you, if I were President--
and, by the way, I'm one of the few Senate Democrats who is not 
running for President----
    [Laughter.]
    Senator Nelson.--but, I mean, it's pretty simple. I'd work 
the international community on this issue like crazy, and what 
I'd do on things like the energy bill is that--I mean, we get 
beat around here just when we try to raise the miles-per-gallon 
on SUVs. But I'd take it further. I mean, I'd put an Apollo 
kind of project going to build a hydrogen engine that was cheap 
enough so it was economical so that we could wean ourselves 
from the dependence on foreign oil, and so that we could start 
the process of cleaning up the environment.
    Thank you.
    The Chairman. Well, thank you very much, Senator Nelson.
    Senator Nelson. Maybe that's my announcement speech.
    [Laughter.]
    The Chairman. Well, we're not short of those.
    [Laughter.]
    The Chairman. I thank you. I do thank you, Senator Nelson, 
for you long advocacy and support on this issue. And I really 
do believe that states like Florida are in some significant 
danger here. But I think the reality is that about 80--70 
percent, something like that, of the American people live on 
both coasts, and there's a real challenge.
    I would like to thank the witnesses for being here. I would 
like to thank them for their candor, and I would like to thank 
them for their honesty and integrity. And one thing I am fairly 
confident of, we will be seeing each other again, because this 
issue is not going away for a long time, and, unfortunately, we 
are a long way from coming up with a coherent international set 
of priorities and policies to address this issue, in my 
opinion.
    I thank you very much, thank the witnesses.
    Our third panel is Mr. Paul Gorman, who is the Executive 
Director of the National Religious Partnership for the 
Environment; Mr. Ethan J. Podell, who is the President of Orbis 
Energy; Mr. John B. Stephenson, the Director of the Natural 
Resources and Environment at the U.S. General Accounting 
Office; and Mr. Christopher Walker, who is the Managing 
Director of the Greenhouse Gas Risk Solutions, Swiss Re 
Financial Services Corporation.
    As the witnesses are seating themselves, I received a 
letter from the Executive Office of the President, Control on 
Environmental Quality, and he would like to take this 
opportunity to share with us in the Committee a summary of the 
actions the Bush Administration has taken thus far to implement 
the President's 10-year strategy to reduce the greenhouse gas 
intensity of the American economy by 18 percent. As 
demonstrated by the enclosed summary, the Administration is 
actively addressing the complex long-term issue of global 
climate change and will work toward meeting the commitments 
outlined in the President's strategy.
    This will be included in the record. Remarkable.
    [Laughter.]
    [The information referred to follows:]

                          Executive Office of the President
                           Council on Environmental Quality
                                 Washington, DC, September 30, 2003
Hon. John McCain,
United States Senate,
Washington, DC.

Dear Chairman McCain:

    I understand the Senate Commerce Committee is scheduled to conduct 
a hearing Wednesday, October 1, on ``The Case for Climate Change 
Action.'' As you explore this important issue, I would like to take the 
opportunity to share with you and the Committee a summary of the 
actions the Bush Administration has taken thus far to implement the 
President's 10-year strategy to reduce the greenhouse gas intensity of 
the American economy by 18 percent. As demonstrated by the enclosed 
summary, the Administration is actively addressing the complex, long-
term issue of global climate change, and will work toward meeting the 
commitments outlined in the President's strategy. I respectfully 
request that this summary be entered into the record.
            Sincerely,
                                       James L. Connaughton
Enclosure

cc: Members of the Senate Commerce, Science, and Transportation 
Committee













    The Chairman. Mr. Gorman, welcome.

         STATEMENT OF PAUL GORMAN, EXECUTIVE DIRECTOR,

       NATIONAL RELIGIOUS PARTNERSHIP FOR THE ENVIRONMENT

    Mr. Gorman. Thank you, Senator and Members of the 
Committee. Thank you for your own perseverance on these 
questions, Senator McCain, and your openness today to hearing 
religious and moral and ethical principles related to this 
issue.
    I represent the National Religious Partnership for the 
Environment, which is an alliance of faith groups across a very 
broad spectrum, the U.S. Conference of Catholic Bishops, the 
National Council of Churches of Christ, a federation of 36 
mainline protestant and orthodox denominations, the Coalition 
on the Environment in Jewish Life, which represents 29 national 
Jewish organizations, and the Evangelical Environmental 
Network, which is an alliance of evangelical Christian 
organizations.
    Each has its own distinctive perspectives, but we share 
precepts for God's creation, for caring for it, albeit with 
different, often imaginative, forms of expression. For example, 
facilitating renewable and solar energy programs, the 
Interfaith Power and Light Campaign, led by the Episcopal 
Church, has helped over 300 congregations in California alone 
conserve energy, preventing four million tons of carbon dioxide 
form entering the atmosphere. The Catholic Bishops of the 
Pacific Northwest issued a pastoral letter on protecting the 
Columbia River. The Redwood Rabbis, so-called, have fought to 
preserve all-growth forests. In addition to asking, ``What 
would Jesus drive,'' the evangelical Christians have worked for 
extension of the Endangered Species Act.
    So with the bishops in rivers, and rabbis in redwoods, and 
evangelicals in wetlands, and Episcopalians cleaning the sky, 
we're at least trying to get out of the house and open our eyes 
and perhaps add a new voice and a source of activity.
    About global climate change, we have fundamental 
agreements, all of which have been stated in formal 
declarations at the highest levels of governance, which we 
would like to be able to submit for the record, Mr. Chairman.
    The Chairman. Without objection.
    [The information referred to follows:]

                  Interfaith Climate & Energy Campaign
                    A Call for Power Plant Clean-Up
    As the U.S. Senate begins debate on legislation that addresses the 
clean-up of America's dirty power plants, religious leaders call on 
policy makers to adopt legislation that includes carbon dioxide as a 
regulated pollutant from power plants. Carbon dioxide is a byproduct of 
burning fossil fuels such as coal and oil. In a balanced system, carbon 
dioxide helps regulate the Earth's climate. However, too much carbon 
dioxide causes excess heat to be trapped in the atmosphere, forcing 
global temperatures upward, the process known as global warming.
    The largest source of carbon dioxide in the U.S. is the electric 
power industry, accounting for about 40 percent of all U.S. emissions. 
More than 88 percent of emissions come from older, dirtier coal-fired 
facilities. In addition, these power plants are a source of nitrogen 
oxide and sulfur dioxides which cause smog, asthma and other breathing-
related illnesses and mercury exposure which causes birth defects.
    There is broad agreement among scientists and experts that global 
warming is occurring and that it will likely result in changes that 
will harm people in the U.S. and around the world. As described in the 
recent climate report of the Bush Administration to the United Nations, 
climate change is linked to devastating environmental impacts: 
including an increase in the severity of hurricanes, floods and 
droughts. Though there may be some positive results to climate change, 
such as increased agricultural productivity in some places, the 
majority of effects are likely to cause harm. These events are likely 
to exact a terrible toll in terms of both human suffering and economic 
loses.
    Protecting God's children and God's creation from harmful air 
pollution is a fundamental moral obligation. Cleaning up dirty power 
plants that cause harmful pollution must therefore be a policy 
priority. The following moral principles ought to apply to policies on 
power plants:

  (1)  Justice for all God's children by addressing the reality that 
        carbon dioxide emissions are causing global warming and that we 
        must protect all God's children from the harmful affects of 
        mercury emissions.

  (2)  Justice for future generations who will be adversely affected by 
        the harmful air pollution that is produced today.

  (3)  Solidarity with people who live in poverty around the world who 
        are more dangerously affected by air pollution and who do not 
        have the resources to adapt to the realities of global warming.

  (4)  Stewardship of the balance of creation which sustains all life 
        on Earth.

    In response to such global environmental concerns, senior religious 
leaders from America's leading denominations have said, ``At stake are: 
the future of God's creation on earth; the nature and durability of our 
economy our public health and public lands; the environment and quality 
of life we bequeath our children and grandchildren. We are being called 
to consider national purpose not just policy.'' With respect to the 
current debate in the U.S. Senate, the Interfaith Climate & Energy 
Campaign calls for:

   A ``4P'' Approach--The Dramatic Reduction of Pollutants 
        Which Cause Smog, Acid Rain, Respiratory Disease, Mercury 
        Contamination AND Global Warming. Legislation should be adopted 
        that dramatically cuts power plant emission of the four major 
        power plant pollutants (4P). One such proposal before the 
        Senate would dramatically cut power plant emission of the four 
        major power plant pollutants by 2007: nitrogen emissions would 
        be cut by 75 percent from 1997 levels, sulfur emissions would 
        be cut by 75 percent below Phase II Acid Rain levels, mercury 
        emissions would be cut by 90 percent from 1999 levels, and 
        carbon dioxide emissions would be cut to 1990 levels. This 
        level of carbon dioxide reduction is contained in the Framework 
        Convention on Climate Change, which was signed by former 
        President Bush and unanimously ratified by the U.S. Senate.

   Close the Grandfather Loophole that Exempts Dirty Old Coal 
        Plants. Legislation should require all power plants to meet the 
        most recent pollution control standards for new pollution 
        sources within a reasonable timeframe.

   Corporate voluntary measures have proven insufficient in 
        addressing carbon dioxide pollution. Since the early 1990s when 
        the Federal Government began calling for voluntary action in 
        reducing carbon emissions, the reality has been that greenhouse 
        gas emissions have significantly increased.

    The Interfaith Climate & Energy Campaign is a coalition of 
religious American leaders, institutions and individuals who for nearly 
two years have been working in 21 states to educate congregants about 
the causes and effects of global climate change and to speak out about 
the religious and moral imperatives to protect God's creation and all 
of God's children. Over 1,200 leading religious leaders have joined in 
calling for Federal policies for energy conservation and climate 
justice.

    Mr. Gorman. We are not scientists, but we are convinced of 
the problem's urgency, as documented by eminent scientists 
worldwide. And to amplify this scientific consensus, we would 
affirm a religious and moral consensus.
    It seems best, in this brief time, to outline four 
principles in this consensus, moral precepts which provide a 
case, we hope, for guiding policy, and scripture guides us 
here.
    First, in Genesis, God declares creation as very good and 
commands us to till and to tend the garden. Humankind is called 
to stewardship. That's why we're here.
    Second, we read, in Psalms, the Earth is the Lord's and the 
fullness thereof, the gifts of creation are intended for the 
well-being of all.
    Third, we have a paramount obligation to defend the poor 
and the orphan, to do justice to the afflicted, and to care 
first for the least of these. Care for God's creation requires 
justice and equity for God's children, and not putting innocent 
lives at risk.
    And we call upon the Senate, in your forthcoming 
deliberations, to address the impact of global climate change 
on the poor, vulnerable peoples and nations of the planet.
    Finally, we have an obligation to the future well-being of 
all life on Earth. God's covenant, which I make between me and 
you and every living creature for perpetual generations, in 
Genesis.
    Protecting our planet's climate is a religious duty, 
because it embraces everything and everyone on Earth.
    Stewardship, covenant, justice, intergenerational equity. 
These perennial principles have never seemed to many of us more 
meaningful and mandatory. We are all part of God's creation. 
Environmental isolationism is neither morally acceptable nor 
faithful to God's law.
    These are high standards, easy to proclaim in rooms like 
this, but they are in the hearts and consciences of an 
increasing number of people of faith in this country, 
worldwide. We recognize challenges still before us, the need 
for further scientific research and energy policy which reduces 
greenhouse gas emissions and steadily and forcibly moves us 
beyond reliance on fossil fuels, assurance of economic 
security, and protection of workers.
    Human habits of materialism and over-consumption, we 
believe, in the faith community, are also root causes of 
environmental degradation. And while we understand the drive of 
deeply held convictions--we have some issues here ourselves--
partisanship and shortsightedness seem to be leading to dead-
ends.
    We have to lift our vision. This is an enterprise for the 
entire human species. So we share these convictions not simply 
as articles of our own faith, but toward a universal moral 
resolve, a conversion of hearts and conscience, without which 
it would seem very difficult to me to challenge at this scale.
    We're grateful for your invitation to share these beliefs. 
We look forward to discussing them further and will be 
communicating them to individual Senators during the October 
recess.
    But we are here to say that the religious community is 
committed to help provide new momentum, as you do here, Mr. 
Chairman to what must be a universal enterprise for the common 
good.
    [The prepared statement of Mr. Gorman follows:]

        Prepared Statement of Paul Gorman, Executive Director, 
           National Religious Partnership for the Environment
    Thank you, Mr. Chairman and members of the Committee:

    I represent members of the National Religious Partnership for the 
Environment, an alliance of faith groups across a broad spectrum: the 
United States Conference of Catholic Bishops, the National Council of 
Churches of Christ (a federation of 36 mainline Protestant and Orthodox 
communions), the Coalition on the Environment and Jewish Life 
(representing 29 national bodies), and the Evangelical Environmental 
Network (an alliance of evangelical Christian organizations). Each has 
its own distinctive perspectives. But we share biblical precepts for 
care of God's creation, albeit with different, often imaginative forms 
of expression.
    For example, supporting renewable and solar energy programs, The 
Interfaith Power and Light campaign, led by the Episcopal Church, has 
helped over 300 congregations in California alone conserve energy, 
preventing 40 million pounds of carbon dioxide from entering the 
atmosphere. The Catholic Bishops of the Pacific Northwest issued a 
pastoral letter on protecting the Columbia River. ``The Redwood 
Rabbis'' have fought to preserve old growth forests. In addition to 
asking ``What Would Jesus Drive?'', evangelical Christians have worked 
for extension of the Endangered Species Act. So with bishops in rivers, 
rabbis in forests, evangelicals in wetlands, and Episcopalians looking 
to the sun, we're at least getting out of the house and perhaps making 
a fresh contribution.
    About global climate, change we have fundamental agreements, all of 
which have. been stated in formal declarations at the highest levels of 
governance, which we would like to submit for the record.
    We are convinced of the problem's urgency as documented by eminent 
scientists worldwide.
    To amplify a scientific consensus, we affirm a religious and moral 
consensus.
    It seems best, in this brief time--perhaps as an introduction to 
those outside the faith community--to outline four principles of this 
religious consensus. These are moral precepts that should guide policy.
    First, in Genesis, God beholds creation as ``very good'' (Gen 1:31) 
and commands us to ``till and tend the garden'' (Gen 2:15). Humankind 
is called to stewardship. Second, we read in Psalms, ``The Earth is the 
Lord's and the fulness thereof' (Ps 24:1). Creation's gifts are 
intended for the well-being of all. Third, we have a paramount 
obligation to ``defend the poor and the orphan; do justice to the 
afflicted'' (Ps 82:3) and to care first for ``the least of these'' 
(Math 25:35). Care for God's creation requires justice for God's 
children and not putting innocent lives at risk. And we call upon the 
Senate, in your forthcoming deliberations, to address the impact of 
global climate change on the poor and vulnerable peoples and nations of 
our planet.
    Finally, we have an obligation to the future well-being of all life 
on Earth, God's ``covenant which I make between me and you and every 
living creature for perpetual generations'' (Gen 9:12). Protecting our 
planet's climate is a religious duty because it embraces everything and 
everyone on Earth.
    Stewardship, covenant, justice, intergenerational equity: these 
perennial principles have never seemed more meaningful and mandatory. 
We are all part of God's creation. Environmental isolationism is 
neither morally acceptable nor faithful to God's Law.
    These are high standards, easier to proclaim than to practice. We 
recognize challenges still before us all: the need for further 
scientific research; an energy policy which reduces greenhouse gas 
emissions and steadily moves us beyond reliance on fossil fuels; 
assurance of economic security and protection of workers. Human habits 
of materialism and over-consumption lie deeply at the root of 
environmental degradation. And while we understand the drive of deeply 
held convictions--we have some issues here ourselves--partisanship and 
short-sightedness seem to be leading to dead ends.
    We have to lift our vision. This is an enterprise for the entire 
human species. So we share these convictions not simply as articles of 
our own faith but toward a universal moral resolve--a conversion of 
hearts and habits . . . without which it would seem difficult to meet a 
challenge of this scale.
    We are grateful for your invitation to share these core beliefs. We 
look forward to discussing them further, and will be communicating them 
to individual Senators particularly during the October recess. Perhaps 
you will pass them on as well. But we are here to say this: the 
religious community is committed to help provide new momentum, as you 
do here, Mr. Chairman, for what must be a universal enterprise to 
reduce global warming for the common good.

    The Chairman. Thank you very much, Mr. Gorman, for a very 
powerful statement.
    Mr. Podell?

           STATEMENT OF ETHAN J. PODELL, PRESIDENT, 
                   ORBIS ENERGY ADVISORS INC.

    Mr. Podell. Mr. Chairman and distinguished Members of the 
Senate, I'm grateful for the invitation to address the 
Committee and to share my perspective, as a businessman who has 
tried to get corporate America to take voluntary action on 
climate change.
    I'm the President of Orbis Energy Advisors, a financing 
consulting firm focused on the business of climate change and 
renewable energy, and I'm also here today as a representative 
of E2, Environmental Entrepreneurs, a national group of 
professional businesspeople who believe in protecting the 
environment while building economic prosperity.
    E2 has over 400 members in 16 states who have been in 
financing and founding more than 800 companies, which have 
created over 400,000 jobs. E2 members currently represent more 
than $20 billion in private equity capital available for 
investment into new companies.
    After a 20 year career as a media entrepreneur, I've spent 
the better part of the past 2 years trying to get corporate 
America to understand and, more importantly, to take some 
meaningful action to address this enormous looming problem 
before us, global warming. My conclusion from this experience 
is that it is essential to enact mandatory limits on greenhouse 
gas emissions, as provided for in S. 139.
    I have consulted on strategy and business development for 
Canter Fitzgerald's greenhouse gas trading business in the 
United States. And from March through August of this year, I 
was the Senior Vice President for Sales and Marketing for the 
Chicago Climate Exchange. As you may know, the Chicago Climate 
Exchange is the first voluntary greenhouse gas cap-and-trade 
program in the United States. My principal role at the Exchange 
was to recruit corporate clients willing to commit to a modest 
pilot program requiring minimal reductions in their greenhouse 
gas emissions.
    I'm here to tell you today that there is very little 
evidence that corporate America has any real interest in 
participating in a voluntary greenhouse gas reduction trading 
program.
    The Chicago Climate Exchange is a terrific idea and an 
innovative institution of the first order. Its founder, Richard 
Sandor, is one of the most dynamic and visionary leaders of the 
business community I've ever met. It seeks to prove the concept 
that a voluntary greenhouse gas emissions reduction program, 
using a cap-and-trade, can be effective within the American 
business community. It's designed as a 4 year pilot program 
running from now through 2006, so the companies which join the 
program are really making a very limited time commitment. And 
Exchange members are also making a very limited commitment to 
reduce their greenhouse emissions, as the targets, the 
reduction targets, set by the Exchange are really rather 
modest. Those reductions are 1 percent below baseline this 
year, rising to 4 percent below baseline in 2006.
    The Chicago Climate Exchange was designed over a number of 
years with the active participation of leading companies from 
many sectors of American business. Notwithstanding the modest 
reduction targets and other incentives embedded in the rules of 
the Exchange, which are designed to make for a very slow and 
non-threatening game of softball, there are, so far, at least, 
very few takers in the corporate world.
    The Chicago Climate Exchange has about 20 members 
responsible for about 3 or 4 percent of the total United States 
greenhouse gas emissions. If you do the math, and apply the 1 
percent per year emissions reductions required of members of 
the Exchange against the 4 percent of total U.S. emissions 
which these companies represent, what we end up with is a very 
small drop removed from a very large bucket. This bucket has 
10,000 drops. The current members of the Chicago Climate 
Exchange will remove four of those 10,000 drops this year, and 
16 in the year 2006.
    As we have seen with the Acid Rain Program, cap-and-trade 
can accomplish real environmental goals at modest cost when 
coupled with a mandatory set of targets. However, without 
regulation and governmentally imposed sanctions, the early 
evidence, at least, is that the American business community is 
not very interested.
    Over the past 6 months, I have spoken or met with more than 
250 companies, mostly in the Fortune 500, but smaller private 
businesses, as well, about why they should join the Chicago 
Climate Exchange. I've also marketed the Exchange to 
municipalities, universities, and state governments.
    For cap-and-trade to work, you really need only three 
things: a target, or cap, representing some reduced level of 
emissions when measured against the past; two, a group of 
participants that will reduce their emissions below the target 
and have excess reduction credits to sell; and, three, a group 
who will miss the target and need to buy credits to be in 
compliance with the rules of the game.
    In marketing the Chicago Climate Exchange, we have very few 
companies in this country willing to buy emissions credits to 
be in compliance with the voluntary greenhouse gas reduction 
program.
    The companies which are willing to participate in a 
voluntary cap-and-trade are those that see carbon trading as a 
way to make some money by selling excess credits, and a way to 
make a statement, really a gesture, about their environmental 
awareness. For these companies, the ones which will be sellers 
of emissions reduction credits, participating in a program such 
as the Chicago Climate Exchange is largely a risk-free, money-
making opportunity. The companies we really need to join a 
carbon cap-and-trade program, the large emitters of greenhouse 
gases, those who will end up as buyers of emissions reduction 
credits--the utilities, the oil, gas, and petrochemical 
companies, the cement-makers, the truckers and railroads, those 
companies are not yet prepared to join a voluntary cap-and-
trade.
    The large carbon emitters listen attentively to all the 
arguments: regulation will happen sooner or later, so they 
should get in early and learn ahead of their competitors; Wall 
Street and other stakeholders are increasingly concerned about 
the link between the companies' carbon liabilities and its 
balance sheets; that the companies' overseas operations are, as 
a practical matter, soon going to be subject to international 
greenhouse gas reductions under Kyoto or other emerging 
regulations, whether or not the U.S. Government participates 
along with the international community. Yes, they listen. Some 
even agree to gather data on their historic levels of 
emissions. But very few companies are prepared to reduce these 
emissions if it will cost them any money.
    Yes, it's true, there is nothing from preventing a 
voluntary system from working here, other than the absence of 
volunteers. And that is precisely what we have, the absence of 
volunteers. And why, after all, should any one American company 
agree to take the lead on voluntary greenhouse gas emissions 
reductions? Were are their competitors on this issue? Why be a 
pioneer when it will just cost them money, threaten their 
market share? And, worst of all, even if they agree to join a 
voluntary reduction program, where's the assurance that 
Washington will recognize their early participation in the 
voluntary program and not eventually pass legislation which 
raises the bar and penalizes the early movers?
    The image here is that pioneers were the ones who ended up 
with arrows in their backs. Long-term thinking about the 
environment being in short supply in corporate America, our 
business leaders generally ignore or forget the fact that many 
pioneers ended up not with arrows in their backs, but as the 
owners of very valuable real estate.
    In the absence of rules and clear guidelines, the field 
evidence I have is that most American businesses would prefer 
to sit this one out from the sidelines. Washington needs to 
provide firm rules and regulations if you expect corporate 
America to respond. When it comes to climate change, voluntary 
action from the American business community means hardly any 
action at all.
    As S. 139 recognizes, a cap-and-trade system is likely be 
cost-effective in reducing greenhouse gas emissions, provided 
it's a mandatory system.
    S. 139, or other mandatory cap-and-trade programs, will 
cause some disruption, some adjustments in everyone's business-
as-usual behavior, and it is not, at least not in the short-
term, without some costs. However, the costs are regularly 
exaggerated, and the benefits often ignored.
    A recent MIT study of S. 139 showed that its enactment 
would affect household purchasing power by less than one-tenth 
of 1 percent. The gains in energy efficiency and in 
technological innovation which will follow once we start to 
constrain carbon emission in this country will far outweigh any 
of the temporary short-term burdens which will arise. And over 
time, the cost of compliance will turn into real and large 
levels of cost savings.
    A recent analysis of S. 139 by the Tellus Institute shows 
that as this legislation is implemented over time, it will 
ultimately yield net cost savings to American consumers of some 
$50 billion per year.
    [The information referred to follows:]

                          Natural Resources Defense Council
                                    Washington, DC, October 1, 2003
   Analysis of the McCain Lieberman Climate Stewardship Act (S. 139)
    The Tellus Institute conducted an analysis for NRDC of the McCain-
Lieberman Climate Stewardship Act (S.l39) using a modified version of 
the Energy Information Administration's (EIA) NEMS model. The analysis 
finds that S. 139 in conjunction with targeted complementary policies 
significantly reduces U.S. emissions of heat-trapping gases while 
saving consumers billions of dollars.
    The bipartisan Climate Stewardship Act is a comprehensive market-
based solution to cut heat-trapping emissions from U.S. sources to 2000 
levels in 2010 and 1990 levels in 2016. In late September or early 
October, the Senate is expected to vote on the modified version of S. 
139, originally introduced in January 2003. This bill would create a 
comprehensive market-based program to cut heat-trapping pollution from 
U.S. sources. The modified McCain-Lieberman bill contains only the 
first phase of their original bill limiting emissions to 2000 levels in 
2010. The second phase (1990 levels in 2016) contained in the original 
bill is not included in the modified version. The modified bill will be 
even cheaper to implement than the original bill analyzed in this 
report. An MIT economic analysis finds that meeting the phase-one 
emission limits will affect household purchasing power by less than 
one-tenth of one percent.
    Key findings of the Tellus study include:

   Net savings to consumers accrue from 2013, reaching $48 
        billion annually in 2020.

   Household electricity bills decrease because of reduced 
        demand, even though electricity prices rise slightly.

   There is no spike in natural gas prices because demand 
        decreases relative to the base case, the result of efficiency 
        policies and the emissions cap.

   Allowance prices increase from $8/tonne CO2-
        equivalent in 2010 to $22/tonne in 2020.

   Results of the new Tellus study are consistent with a recent 
        study by the Massachusetts Institute of Technology (MIT), with 
        the Tellus study forecasting even lower compliance costs. Both 
        analyses predict sharply lower costs than forecast by the 
        Energy Information Administration, which does not adequately 
        predict energy savings.

    The modeling encompasses a set of complementary policies for cost-
effective implementation of the Act, including energy efficiency 
investments funded by sales of pollution allowances, oil savings of 1 
million barrels per day by 2013, renewable energy standards, promotion 
of combined heat and power systems, caps on other power plant 
pollutants, and smart growth measures. A scenario analyzing a more 
aggressive (Advanced) policy to improve vehicle fuel efficiency showed 
lower allowance prices and higher net economic benefits. These policies 
are relatively modest in comparison to bipartisan proposals already 
offered in congress, and backed by NRDC and others.
Table 1.--Key Results for the Policy and Advanced Policy Cases


Comparison to Other Studies
    The MIT Joint Program on the Science and Policy of Global Change 
recently published Emissions Trading to Reduce Greenhouse Gas Emissions 
in the United States: The McCain Lieberman Proposal. Scenario 7 of that 
analysis resembles the scenario analyzed in this analysis, although the 
MIT analysis does not include complementary policies. The MIT results 
have allowance prices increasing from $21/tonne CO2 in 2010 
to $36/tonne CO2 in 2020 (2001$), higher than the values 
that we have calculated. Even with the higher
    allowance prices, MIT calculates that welfare costs (the cost to 
the economy as measured by the impact on household purchasing power) 
would be only 0.09 percent to 0.13 percent of the business-as-usual 
consumption levels. MIT also analyzed a Phase 1 only of the above 
scenario (Scenario12). They find the costs of the Act to be 
significantly lowered. If only Phase 1 reductions are implemented the 
MIT results have allowance prices increasing from only $9/tonne 
CO2 in 2010 to $14/tonne CO2 in 2020 (2001$), 
more than half the value found for full implementation of the Act. The 
corresponding welfare costs are also substantially reduced to only 0.02 
percent of the business-as-usual consumption levels from 2010 onward. 
This translates to a cost per household of only $15-$19 per year from 
2010-2020.
    The MIT results suggest that if the complementary policies adopted 
in our analysis were included also in the MIT analysis, the effect 
would be to further reduce both MIT's estimate of allowance prices and 
welfare costs. As in this study, MIT finds that natural gas consumption 
would be lower under S. 139 than under its business-as-usual case.
    The Energy Information Administration analyzed S. 139 at the 
request of Senator Inhofe (and a subsequent request by Senator 
Lieberman). EIA used its energy forecasting NEMS model to conduct the 
analysis without the modifications and complementary policies 
considered in this analysis. In this form the NEMS model is well known 
to respond weakly to policy signals, implying that higher allowance 
prices are needed to achieve the emission limits of S. 139.
    The allowance prices forecast by EIA average more than twice as 
high as those forecast by Tellus and are also significantly above MIT's 
prices. Welfare costs projected by EIA are also much higher than those 
found in the MIT study by a factor that greatly exceeds the difference 
in allowance prices. This translates into cost to households that are 
vastly higher than found in MIT's study, where the costs are quite 
modest, to the Tellus study were households in the later years actually 
begin to save considerable amounts of money because electricity prices 
increase only modestly compared to the reference case while energy 
efficiency measures help reduce electricity demand. Another major 
difference is that EIA projects an increase, rather than a decrease, in 
natural gas consumption under S. 139 relative to its Base case. This is 
due to the very weak demand response in the end-use sectors projected 
by EIA. As a result a much greater proportion of the total emission 
reductions must be achieved by fuel switching from coal to natural gas 
in the electric sector, driving up gas demand and prices.
Table 2.--Comparison of S. 139 Analyses


    EIA's energy forecasting model reflects and reinforces the status 
quo. It, thus, limits the potential impact of new and innovative 
policies that differ from business as usual behavior. Analyses 
reviewing the historical record of energy-economic model results, 
including NEMS, have shown a strong tendency to over project energy 
consumption and underestimate the impacts that technological change can 
have on reducing consumption. This results in a systematic 
overestimation of both future allowance and energy prices. Furthermore, 
the NEMS model assumes a reference case where all resources are fully 
employed and efficiently allocated. Therefore, by definition any 
changes in the mix to protect the environment will automatically lead 
to a less efficient and more costly outcome. Yet, to assume that there 
must be a trade-off between environmental and economic benefits has 
been shown to be false. For example, it has been shown over and over 
again in the economic literature and through practical experience that 
energy efficiency measures can and do result in a net benefit to 
businesses and consumers.
    Our results for the policy cases analyzed demonstrate that the 
Climate Stewardship Act is a cost-effective approach to managing U.S. 
emissions of global warming pollution, especially when partnered with 
sound energy policies that help increase energy efficiency and clean, 
renewable, sources of energy. Furthermore, implementation of just Phase 
1 of the Act is shown to further decrease costs.
    The executive summary and full report can be found at:

        http://www.tellus.org/energy/publications/
        McCainLieberman2003.pdf

    If you have any questions or need additional information, please do 
not hesitate to contact the following NRDC Climate Center staff:

        Dan Lashof, Director of Science [email protected]

        Antonia Herzog, Staff Scientist [email protected]

    Mr. Podell. Real meaningful action on climate change is not 
an academic or theoretical issue anymore. A March 2003 Gallup 
Poll survey found that 75 percent of Americans support 
mandatory controls on carbon dioxide and other greenhouse gas 
emissions.
    In a recent University of Oregon poll, some 80 percent of 
Americans said that climate change is a real problem and one 
for which the business community should take direct 
responsibility.
    Many in the business community understand the magnitude of 
global warming. Some are waiting for our political leadership 
to devise the necessary rules and policies, others are hoping 
that regulation will never occur. But in either case, without 
regulation, the business community will stay in its comfort 
zone and continue to wait and delay action on this critical 
world issue.
    Scientific understanding today of climate change is clear 
and certain enough to point public policy in one direction, and 
one direction only. We do not really need more research on the 
relationship between clouds and climate change before we take 
action. We do not need to wait a decade for energy research to 
magically deliver a silver bullet, which will never arrive 
unless the private sector has a clear incentive to invest in 
innovative solutions.
    No, what we need is to take action now to reduce our 
greenhouse gas emissions. We are kidding ourselves if we think 
that a plea for voluntary action to reduce greenhouse gas 
emissions in the United States will accomplish anything.
    Finally, climate change is, as the World Business Council 
said not too long ago, the single biggest issue facing the 
world business community. The American business community has a 
special responsibility here to participate fully and actively 
in finding the right solution. We emit 25 percent of the 
world's greenhouse gases.
    S. 139 is a path-breaking, innovative step, a bold effort 
to take America in the right direction on a critical issue for 
the future of the world. Only with a mandatory set of 
greenhouse gas emissions targets will we make any meaningful 
progress in winning this crucial war with carbon.
    Thank you.
    [The prepared statement of Mr. Podell follows:]

           Prepared Statement of Ethan J. Podell, President, 
                       Orbis Energy Advisors Inc.
Summary
    The evidence so far is that voluntary greenhouse gas (GHG) cap-and-
trade programs are not attracting many volunteers from the American 
business community.
    For instance, the Chicago Climate Exchange (``CCX'')--the nation's 
first attempt to create a voluntary, multi-sector greenhouse gas cap-
and-trade program--has only attracted 20 or so members. It is not 
because the CCX imposes large GHG reduction obligations on its members; 
the reductions are only 1 percent below baseline in 2003, rising to 4 
percent below baseline in 2006. Furthermore, CCX members are only 
making a limited, 4-year commitment to a pilot program running from now 
through 2006.
    The companies which are so far participating in a voluntary GHG 
reduction program such as the Chicago Climate Exchange are those that 
see carbon trading as a way to make some money by selling excess 
reduction credits, and a way to make a statement--really a gesture--
about their environmental awareness. For these companies participating 
in a program such as the Chicago Climate Exchange is largely a risk-
free, money-making opportunity.
    The companies we really need to join a GHG cap-and-trade program, 
the large emitters of greenhouse gases, those who will end up as buyers 
of emission reduction credits--the utilities, the oil/gas/petrochemical 
companies, the cement makers, the truckers and railroads--these 
companies are not prepared to join a voluntary cap-and-trade program. 
They view voluntary compliance as a short term expense which will 
create competitive disadvantages. Long term benefits and cost savings 
are ignored.
    Washington needs to provide firm rules and regulations if you 
expect corporate America to respond. When it comes to climate change, 
voluntary action from the corporate community means hardly any action 
at all. As S. 139 recognizes, a cap-and-trade system is likely to be 
effective in reducing greenhouse gas emissions, provided it is 
mandatory.
                                 ______
                                 
    Mr. Chairman and distinguished Members of the Senate,

    I am grateful for the invitation to address the Committee and to 
share my perspective as a businessman who has tried to get corporate 
America to take voluntary action on climate change.
    My name is Ethan Podell. I'm the President of Orbis Energy 
Advisors, a finance and consulting firm focused on the business of 
climate change and renewable energy. I am also here today as a 
representative of E2--Environmental Entrepreneurs--a national group of 
professionals and business people who believe in protecting the 
environment while building economic prosperity. E2 has over 400 members 
in 16 states who have been involved in financing and founding more than 
800 companies, which created over 400,000 jobs. E2 members currently 
represent more than $20 billion in private equity capital available for 
investment into new companies.
    After a 20 year career as a media entrepreneur, I've spent the 
better part of the past two years trying to get corporate America to 
understand--and more importantly to take some meaningful action to 
address--this enormous problem looming before us . . . global climate 
change. My conclusion from this experience is that it is essential to 
enact mandatory limits on greenhouse gas emissions as provided for by 
S. 139.
    I consulted on strategy and business development for Cantor 
Fitzgerald's greenhouse gas trading unit. From March through August of 
this year, I was the senior vice president for sales and marketing for 
the Chicago Climate Exchange. As you may know, the Chicago Climate 
Exchange is the first voluntary, greenhouse gas cap-and-trade program 
in the U.S. My principal role at the Exchange was to recruit corporate 
clients willing to commit to a modest, pilot program requiring minimal 
reductions in their greenhouse gas emissions.
    I'm here to tell you today that there is very little evidence that 
corporate America has any real interest in participating in a voluntary 
greenhouse gas reduction trading program.
    The Chicago Climate Exchange is a terrific idea and an innovative 
institution of the first order. It seeks to prove the concept that a 
voluntary, greenhouse gas emissions reduction program using a cap-and-
trade system can be effective with the American business community. The 
Exchange is designed as a 4-year pilot program, running from now 
through 2006, so that companies which join the program are making a 
limited time commitment. And Exchange members are also making a very 
limited commitment to reduce their greenhouse gas emissions, as the 
reduction targets set by the Exchange are extremely modest. Those 
reductions are 1 percent below baseline in 2003, rising to 4 percent 
below baseline in 2006.
    The Chicago Climate Exchange was designed over a number of years 
with the active participation of leading companies from many sectors of 
American business. Notwithstanding the modest reduction targets and 
other incentives embedded in the rules of the Exchange, which are 
designed to make for a very slow and non-threatening game of softball, 
there are--so far at least--very few takers in the corporate world. As 
of last week, only about 20 companies in the U.S. had agreed to 
participate in the Chicago Climate Exchange. These companies are 
responsible for about 3 or 4 percent of the total U.S. greenhouse gas 
emissions. If you do the math and apply the 1 percent per year 
emissions reduction required of members of the Chicago Climate Exchange 
against the 4 percent of total U.S. emissions which these companies 
represent, what we end up with is a very small drop removed from a very 
large bucket. This bucket has 10,000 drops; the current members of the 
Chicago Climate Exchange will remove 4 of these 10,000 drops this year 
and 16 in the year 2006.
    As we have seen with the acid rain program, cap-and-trade can 
accomplish real environmental goals at modest cost when coupled with a 
mandatory set of targets. However, without regulation and 
governmentally-imposed sanctions, the early evidence, at least, is that 
the American business community is not very interested in a voluntary, 
greenhouse gas cap and trade program.
    Over the past six months, I've spoken or met with more than 250 
companies, mostly in the Fortune 500, but smaller private businesses as 
well, about why they should join the Chicago Climate Exchange. I've 
also marketed the Exchange to municipalities, universities and state 
governments.
    For a cap and trade system to work, you really need only three 
things: (1). a target or cap representing some reduced level of 
emissions when measured against the past; (2). a group of participants 
that will reduce their emissions below the target and have excess 
reduction credits to sell; and (3). a group who will miss the target 
and need to buy credits to be in compliance with the rules of the game.
    What I've seen in marketing the Chicago Climate Exchange is that 
there are very few companies in this country willing to commit to buy 
emission credits to be in compliance with a voluntary greenhouse gas 
reduction program.
    The companies which are willing to participate in a voluntary can-
and-trade program are those that see carbon trading as a way to make 
some money by selling excess credits, and a way to make a statement--
really a gesture--about their environmental awareness. For these 
companies, the ones which will be sellers of emission reduction 
credits, participating in a program such as the Chicago Climate 
Exchange is largely a risk-free, money-making opportunity.
    The companies we really need to join a carbon cap-and-trade 
program, the large emitters of greenhouse gases, those who will end up 
as buyers of emission reduction credits--the utilities, the oil/gas/
petrochemical companies, the cement makers, the truckers and 
railroads--these companies are not yet prepared to join a voluntary 
cap-and-trade program.
    The large carbon emitters listen attentively to all the arguments: 
that regulation will happen sooner or later so they should get in early 
and learn ahead of their competitors; that Wall Street and other 
stakeholders are increasingly concerned about the link between the 
company's carbon liabilities and its balance sheet; that the company's 
overseas operations are as a practical matter subject to greenhouse gas 
reductions under the Kyoto Protocol or other emerging international 
regulations whether or not the U.S. Government participates along with 
the international community. . . . Yes, they listen, some even agree to 
gather data on their historic levels of emission, but very few 
companies are prepared to reduce these emissions if it will cost them 
any money.
    Yes, it's true that there is nothing to prevent a voluntary system 
from working here . . . other than the absence of volunteers. And that 
is precisely what we have--the absence of volunteers.
    And, why after all, should any one American company agree to take 
the lead on voluntary greenhouse gas reductions? Where are their 
competitors on this issue? Why be a pioneer when it will just cost them 
money, threaten their market share, and worst of all, even if they 
agree to join a voluntary reduction program, where's the assurance that 
Washington will recognize their early participation in a voluntary 
program, and not later create legislation which raises the bar and 
penalizes the early movers? The image here is that pioneers were the 
ones who ended up with arrows in their backs. Long-term thinking about 
the environment being in short supply in corporate America, our 
business leaders generally ignore, or forget, the fact that many 
pioneers ended up, not with arrows in their backs, but as the owners of 
very valuable real estate.
    In the absence of rules and clear guidelines, the field evidence I 
have is that most American businesses would prefer to sit this one out 
from the sidelines. Washington needs to provide firm rules and 
regulations if you expect corporate America to respond. When it comes 
to climate change, voluntary action in the real world means hardly any 
action at all. As S. 139 recognizes, a cap-and-trade system is likely 
to be cost-effective in reducing greenhouse gas emissions, provided it 
is a mandatory system.
    A mandatory carbon cap-and-trade program, such as S. 139, will 
cause some disruption, some adjustments in everyone's business-as-usual 
behavior, and it is not--at least not in the short term--without some 
costs. However, the costs are regularly exaggerated, and the benefits 
often ignored by the business community. A recent MIT study on S. 139 
showed that its enactment would affect household purchasing power by 
less than 1/10th of 1 percent. The gains in energy efficiency and in 
technological innovation which will follow once we start to constrain 
carbon emissions in this country will far outweigh any of the short 
term burdens which will be imposed upon the business community. And 
over time, the cost of compliance will turn into real and large levels 
of cost savings. A recent analysis of S. 139 by the Tellus Institute 
shows that as this legislation is implemented over time, it will 
ultimately yield net cost savings to American consumers of some $50 
billion per year.
    Real, meaningful action on climate change is not an academic or 
theoretical issue anymore. A March, 2003 Gallup Poll found that 75 
percent of Americans support ``mandatory controls on carbon dioxide and 
other greenhouse gas emissions.'' In a recent University of Oregon 
poll, some 80 percent of Americans said that climate change is a real 
problem and one for which the business community should take direct 
responsibility.
    Many in the business community understand the magnitude of global 
warming. They are waiting for our political leadership to devise the 
necessary rules and policies. Without regulation, the business 
community will stay in its comfort zone, and continue to wait and delay 
action on this critical world issue.
    Scientific understanding today of climate change is clear and 
certain enough to point public policy in one direction and one 
direction only. We do not really need more research on the relationship 
between clouds and climate change before we take action. We do not need 
to wait a decade for energy research to magically deliver a silver 
bullet, which will never arrive unless the private sector has a clear 
incentive to invest in innovative solutions. No, what we need is to 
take action now to reduce our greenhouse gas emissions. We are kidding 
ourselves if we think that a plea for voluntary action to reduce 
greenhouse gas emissions in the U.S. will accomplish anything.
    Climate change is, as the World Business Council said not too long 
ago, the single biggest issue facing the world business community. The 
American business community has a special responsibility here to 
participate fully and actively in finding the right solution. We emit 
25 percent of the world's greenhouse gases. S. 139 is a path-breaking, 
innovative step, a bold effort to take America in the right direction 
on a critical issue for the future of our world. Only with a mandatory 
set of greenhouse gas emission targets will we make any meaningful 
progress in winning this crucial war with carbon.
    Thank you.
                                 ______
                                 
                            Ethan J. Podell
    Trained as a lawyer, Ethan Podell spent over twenty years as an 
entrepreneur in television programming and distribution. He co-founded 
and built two private media enterprises, active in both the U.S. and 
European markets. Both companies--Orbis Communications and Orbis 
Entertainment--were eventually sold to publicly-traded entertainment 
companies. Podell has served as chief financial officer (Orbis 
Communications Inc.) and chief executive officer of Orbis Entertainment 
Company (later All American Orbis), where he was responsible for client 
relationships, program creation and sales. Podell began his career in 
1978 as a lawyer for O'Melveny & Myers in Los Angeles, and then worked 
in legal and business affairs for CBS and HBO, before starting his 
first company.
    Several years ago Ethan Podell began an entirely new career focused 
on environmental issues, in particular business opportunities connected 
with climate change and greenhouse gas trading. As a consultant, Podell 
developed a marketing strategy for greenhouse gas trading in the U.S. 
(for a unit of Cantor Fitzgerald), and recruited clients for the first 
voluntary greenhouse gas trading program in the U.S. (Chicago Climate 
Exchange), where he was senior vice president for sales and marketing. 
Podell recently founded Orbis Energy Advisors Inc., a finance and 
consulting company focused on the business of climate change and 
renewable energy.
    Podell is active in E2, a national community of professionals and 
business people promoting environmental protection while building 
economic prosperity. He has also done pro bono work as a lawyer and 
business adviser for the Rainforest Alliance and The Nature 
Conservancy.
    Ethan Podell earned his undergraduate degree at Brown University 
(B.A. 1974) where he was elected to Phi Beta Kappa. He holds a Masters 
from the University of Chicago (Committee on Social Thought, 1975) and 
a law degree from Northwestern University (1978), where he was on the 
editorial board of the Law Review.
    Podell is a member of the State Bar of California, and currently 
resides in New York.
                                           Ethan J. Podell,
                                                         President,
                                             Orbis Energy Advisors Inc.

    The Chairman. Thank you, sir.
    Mr. Stephenson, welcome back.

           STATEMENT OF JOHN B. STEPHENSON, DIRECTOR,

               NATURAL RESOURCES AND ENVIRONMENT,

            UNITED STATES GENERAL ACCOUNTING OFFICE

    Mr. Stephenson. Thank you.
    Mr. Chairman, Senator Lautenberg, and Senator Nelson, my 
only purpose in being here today is to make some preliminary 
and, I might add, independent observation about the 
Administration's Global Climate Change Initiative that it 
announced back in February 2002.
    This initiative included, among other things, a goal 
concerning domestic emissions of carbon dioxide and other 
greenhouse gases. Specifically, the initiative established the 
goal of reducing U.S. emissions intensity by 18 percent by 
2012. This is 4 percentage points more than the--or, I should 
say, less than the 14 percent reduction that would otherwise 
have been expected to occur without the initiative. It's 
important to note that the Administration's goal is based on 
emission intensity, not total emissions.
    I had a graphic to show, that hopefully was handed out.
    The Chairman. We have it.
    Mr. Stephenson. Good.
    Now, emissions intensity is the ratio between that top 
line, the green line, and the bottom two lines. So, for 
example, in 1990, which you don't have on your chart, U.S. 
emissions totaled about 1,909 million metric tons of carbon 
equivalents, and the economic output at that time was about 
$9.2 trillion. Dividing these two numbers yields the emission 
intensity ratio of 200 million metric tons. If emissions and 
economic output increase by the same proportion, the ratio 
doesn't change.
    [The chart referred to follows:]

    
    

    What the Administration is saying is that emissions will 
increase more slowly than output increases, and, therefore, the 
emission intensity ratio will decrease by 18 percent.
    So it's important to note that we're playing with the slope 
of the line. The blue line on your chart is the business-as-
usual case that's projected through 2012. The red line 
represents the Administration's slowed growth rate. And, 
therefore, the ratio of those, between that top line, which is 
the gross domestic product, would decline. So it's a little bit 
misleading when you talk about, you know, a declining intensity 
ratio. It's really still increasing the emissions, just at a 
slower rate.
    My testimony is based on ongoing work for this Committee 
to, in part, determine, one, the basis for the Administration's 
18 percent emissions intensity reduction goal; two, the extent 
to which the 30 projects comprising the initiative contribute 
to the goal; and, three, the extent to which the Administration 
plans to track progress in meeting its goal.
    First, in analyzing the 18 percent goal, let me reiterate 
that it's four additional percentage points beyond the 14 
percent otherwise expected, so it's very, very modest. We could 
not, however, find a specific rationale for the reduction, as 
opposed to any other level that they might have proposed. The 4 
percent represents about 100 million metric tons less than 
otherwise occur in 2012 if you did nothing in that 1 year. For 
the overall 11-year period, it's only 2 percent, or 500 million 
metric tons, less than would otherwise occur.
    Second, the Administration's climate change initiative 
identifies 30 projects, albeit notional projects, it expects to 
help reduce greenhouse gas emissions and achieve the 18 percent 
goal. However, we found no current or comprehensive source of 
information about all of the projects or specifically how the 
contributions of these individuals projects will add up to the 
500 million metric tons that it estimates the initiative will 
save over the 11-year period.
    Our analysis show that no emission estimates were provided 
for 19 of those 30 projects. Of the 11 projects that did 
contain emission estimates, eight were based upon past 
reduction levels or related to measures that were already 
underway before the initiative was announced. That leaves only 
three of the 30 projects representing future emission estimates 
specifically attributable to the initiative.
    And, finally, the Administration states that it plans to 
determine, in 2012, whether the goal of reduced emission 
intensity was met. This means that it will not be in a position 
to determine, until a decade after announcing the initiative, 
whether its efforts are on track or whether additional efforts 
may be warranted.
    We believe that the Congress and the public would be better 
served if the Administration would, one, make regularly 
available more current and complete information regarding the 
basis for establishing its goal; two, better describe the 
specific projects and their expected contribution to the goal; 
and, three, develop a plan for monitoring interim progress. 
Providing such information would constitute a small, but 
important, step toward addressing broader issues in the policy 
debate now before the Congress about challenges posed by global 
climate change.
    Mr. Chairman, that concludes my statement. I'll be happy to 
answer questions.
    [The prepared statement of Mr. Stephenson follows:]

 Prepared Statement of John B. Stephenson, Director, Natural Resources 
        and Environment, United States General Accounting Office
Preliminary Observations on the Administration's February 2002 Climate 
        Initiative
    Mr. Chairman and Members of the Committee:

    We are pleased to be here today to discuss our preliminary 
observations on certain aspects of the Administration's February 2002 
Global Climate Change Initiative. This Initiative included, among other 
things, a goal related to domestic emissions of carbon dioxide and 
other greenhouse gases.
    Specifically, the Initiative established the goal of reducing U.S. 
emissions intensity 18-percent by 2012, which is 4 percentage points 
more than the 14-percent reduction that was otherwise expected to 
occur. In 2012, this4-percent reduction in emissions intensity is 
expected to translate into a 100 million ton reduction in carbon 
emissions below levels that would be expected in the absence of the 
Initiative. The Initiative is comprised of 30 elements, including 
partnerships with industry and tax credits, designed to achieve the 
reduction in emissions intensity.
    It is important to note that the Administration's goal is to reduce 
emissions intensity, not total emissions. Emissions intensity measures 
the amount of greenhouse gases emitted per unit of economic output. For 
example, in 1990, U.S. emissions totaled 1,909 million metric tons of 
carbon equivalent and economic output (or Gross Domestic Product) 
totaled $9,216 billion.\1\ Dividing these numbers yields an emission 
intensity ratio of 207 tons of emissions per million dollars of 
economic output. Emissions intensity changes in response to variations 
in either emissions or economic output. For example, if emissions 
increase more slowly than economic output increases, the ratio 
decreases. If emissions increase more quickly than economic output 
increases, the ratio increases. If emissions and economic output 
increase by the same proportion, emissions intensity does not change.
---------------------------------------------------------------------------
    \1\ To allow for comparisons among greenhouse gases, which differ 
in terms of their effects on the atmosphere and their expected 
lifetimes, emissions are sometimes measured in million metric tons of 
carbon equivalent (which we refer to as million metric tons). The 
economic output number is expressed in 1996 dollars.
---------------------------------------------------------------------------
    Our testimony, which is based on ongoing work, discusses the extent 
to which the Administration's public documents (1) explain the basis 
for its general goal of reducing emissions and its specific goal of 
reducing emissions intensity 18 percent by 2012, (2) explain how the 
elements included in the Administration's Initiative are expected to 
reduce emissions and contribute to the goal of reducing emissions 
intensity 18 percent, and (3) discuss the Administration's plans to 
track progress toward meeting the goal. We expect to issue a final 
report on the results of our work later this year.
    Our testimony is based on our analysis of the Administration's 
February 2002 Global Climate Change Policy Book and subsequent White 
House fact sheets, as well as congressional testimony by administration 
officials, an August 2003 report on Federal climate change spending,\2\ 
and related documents. Because of time constraints, we limited our work 
to reviewing these documents.
---------------------------------------------------------------------------
    \2\ Federal Climate Change Expenditures: Report to Congress, Aug. 
2003.
---------------------------------------------------------------------------
    We performed our work between July and September 2003 in accordance 
with generally accepted government auditing standards.
Summary
    In summary, in our review of the Administration's documents, we 
found that the Administration provided a general basis for its climate 
goal, but did not provide a detailed rationale for the emissions 
intensity target that it established. That is, we did not find a 
specific justification for the additional 4-percentage-point 
reduction--as opposed to any other target that could have been 
established--or what achieving a 4-percent reduction is specifically 
intended to accomplish.
    The Administration's documents identified 30 elements that it 
expects to help reduce greenhouse gas emissions, but did not 
consistently provide information on how each element would contribute 
to the approximately 100 million metric tons that it estimates the 
Initiative will save in 2012. In 11 cases, the Administration provided 
an estimate of the element's contributions, but in 19 other cases it 
did not provide such an estimate. Moreover, while 3 of the 11 estimates 
represented future savings levels related to activities that occurred 
after the Initiative was announced, the other 8 estimates were based 
upon past or current savings levels or were related to elements that 
were underway before the Initiative was announced. Furthermore, we 
found no current and comprehensive source for information about all 30 
of the Initiative's elements and their expected contributions toward 
achieving the goal of the Initiative.
    Finally, the Administration states that it plans to determine, in 
2012, whether the goal of reducing emissions intensity was met. 
However, the documents we reviewed did not indicate whether it plans to 
assess its progress in the interim. Unless the Administration conducts 
one or more interim assessments, it will not be in a position to 
determine, until a decade after announcing the Initiative, whether its 
efforts to meet the goal are having the intended effect or whether 
additional efforts may be warranted.
    To help the Congress credibly assess the likelihood that the 
Initiative will achieve its stated goal, we believe that it would be 
helpful if the Administration would make readily available more current 
and complete information regarding the basis for establishing its 
emissions intensity goal, the elements intended to help achieve it as 
well as their expected contributions, and plans for monitoring interim 
progress toward the goal. Providing such information would constitute a 
small, but important step toward addressing broader issues in the 
policy debate now before the Congress about the challenges posed by 
global climate change.
Background
    Carbon dioxide and certain other gases trap some of the sun's heat 
in the earth's atmosphere and prevent it from returning to space. The 
trapped energy warms the earth's climate, much as glass in a 
greenhouse. Hence, the gases that cause this effect are often referred 
to as greenhouse gases. In the United States, the most prevalent 
greenhouse gas is carbon dioxide, which results from the combustion of 
coal and other fossil fuels in power plants, the burning of gasoline in 
vehicles, and other sources. The other gases are methane, nitrous 
oxide, and three synthetic gases. In recent decades, concentrations of 
these gases have built up in the atmosphere, raising concerns that 
continuing increases might interfere with the earth's climate, for 
example, by increasing temperatures or changing precipitation patterns.
    In 1997, the United States participated in drafting the Kyoto 
Protocol, an international agreement to limit greenhouse gas emissions, 
and in 1998 it signed the Protocol. However, the previous 
administration did not submit it to the Senate for advice and consent, 
which are required for ratification. In March 2001, President Bush 
announced that he opposed the Protocol.
    In addition to the emissions intensity goal and domestic elements 
intended to help achieve it, the President's February 2002 climate 
initiative includes: (1) new and expanded international policies, such 
as increasing funding for tropical forests, which sequester carbon 
dioxide, (2) enhanced science and technology, such as developing and 
deploying advanced energy and sequestration technologies, and (3) an 
improved registry of reductions in greenhouse gas emissions. According 
to testimony by the Chairman of the White House Council on 
Environmental Quality, the President's climate change strategy was 
produced by a combined working group of the Domestic Policy Council, 
National Economic Council, and National Security Council.
    While U.S. greenhouse gas emissions have increased significantly, 
the Energy Information Administration reports that U.S. emissions 
intensity has generally been falling steadily for 50 years. This 
decline occurred, in part, because the U.S. energy supply became less 
carbon-intensive in the last half-century, as nuclear, hydropower, and 
natural gas were increasingly substituted for more carbon-intensive 
coal and oil to generate electricity.
Administration's Public Documents Provide a Context But Not a Specific 
        Basis for the 18-percent Goal
    The Administration explained that the Initiative's general goal is 
to slow the growth of U.S. greenhouse gas emissions, but it did not 
explain the basis for its specific goal of reducing emissions intensity 
18 percent by 2012 or what a 4-percent reduction is specifically 
designed to accomplish. Reducing emissions growth by 4 percentage 
points more than is currently expected would achieve the general goal, 
but--on the basis of our review of the fact sheets and other 
documents--we found no specific basis for establishing a 4-percentage-
point change, as opposed to a 2- or 6-percentage-point change, for 
example, relative to the already anticipated reductions.
    According to the Administration's analysis, emissions under its 
Initiative will increase between 2002 and 2012, but at a slower rate 
than otherwise expected. Specifically, according to Energy Information 
Administration (EIA) projections cited by the Administration, without 
the Initiative emissions will increase from 1,917 million metric tons 
in 2002 to 2,279 million metric tons in 2012. Under the Initiative, 
emissions will increase to 2,173 million metric tons in 2012, which is 
106 million metric tons less than otherwise expected. We calculated 
that under the Initiative, emissions would be reduced from 23,162 
million metric tons to 22,662 million metric tons cumulatively for the 
period 2002-12. This difference of 500 million metric tons represents a 
2-percent decrease for the 11-year period.
    Because economic output will increase faster than emissions between 
2002 and 2012, according to EIA's projections, emissions intensity is 
estimated to decline from 183 tons per million dollars of output in 
2002 to 158 tons per million dollars in 2012 (a 14-percent decline) 
without the Initiative, and to 150 tons per million dollars under the 
Initiative (an 18-percent decline).
Administration's Public Documents Estimated Contributions for Some, but 
        Not All, of the Initiative's Elements
    The Administration identified 30 elements (26 in February 2002 and 
another 4 later) that it expected would help reduce U.S. emissions by 
2012 and, thus, contribute to meeting its 18-percent goal. These 30 
elements include regulations, research and development, tax incentives, 
and other activities. (The elements are listed in Appendix I.) The 
Administration groups them into four broad categories, as described 
below.

        Providing incentives and programs for renewable energy and 
        certain industrial power systems. Six tax credits and seven 
        other elements are expected to increase the use of wind and 
        other renewable resources, combined heat-and-power systems, and 
        other activities. The tax credits cover electricity from wind 
        and new hybrid or fuel-cell vehicles, among other things. Other 
        elements would provide funding for geothermal energy, primarily 
        in the western United States, and advancing the use of 
        hydropower, wind, and other resources on public lands. Still 
        other elements involve research and development on fusion 
        energy and other sources.

        Improving fuel economy. Three efforts relating to automotive 
        technology and two other elements are expected to improve fuel 
        economy. The technology efforts include advances in hydrogen-
        based fuel cells and low-cost fuel cells. Two of the five 
        elements are mandatory. First, a regulation requiring the 
        installation of tire pressure monitoring systems in cars and 
        certain other vehicles was finalized in June 2002 and will be 
        phased in between 2003 and 2006.\3\ Properly inflated tires 
        improve fuel efficiency. Second, a regulation requiring an 
        increase in the fuel economy of light trucks, from the current 
        20.7 miles per gallon to 22.2 miles per gallon in 2007, was 
        finalized in April 2003.\4\
---------------------------------------------------------------------------
    \3\ Federal Motor Vehicle Safety Standards; Tire Pressure 
Monitoring Systems; Controls and Displays, 67 Fed. Reg. 38704 (2002)(to 
be codified at 49 C.F.R. pts. 571 and 596).
    \4\ Light Truck Average Fuel Economy Standards, Model Years 2005-
2007, Final Rule, 68 Fed. Reg. 16868 (2003)(to be codified at 49 C.F.R. 
pt. 533).

        Promoting domestic carbon sequestration. Four U.S. Department 
        of Agriculture programs were identified as promoting carbon 
        sequestration on farms, forests, and wetlands. Among other 
        things, these programs are intended to accelerate tree planting 
---------------------------------------------------------------------------
        and converting cropland to grassland or forests.

        Challenging business to reduce emissions. Voluntary initiatives 
        to reduce greenhouse gases were proposed for U.S. businesses. 
        For major companies that agreed to establish individual goals 
        for reducing their emissions, the Environmental Protection 
        Agency (EPA) launched a new Climate Leaders Program. In 
        addition, certain companies in the aluminum, natural gas, 
        semiconductor, and underground coal mining sectors have joined 
        voluntary partnerships with EPA to reduce their emissions. 
        Finally, certain agricultural companies have joined two 
        voluntary partnerships with EPA and the Department of 
        Agriculture to reduce their emissions.

    The Administration provided some information for all 30 of the 
Initiative's elements, including, in some cases, estimates of previous 
or anticipated emission reductions. However, inconsistencies in the 
nature of this information make it difficult to determine how 
contributions from the individual elements would achieve the total 
reduction of about 100 million metric tons in 2012. First, estimates 
were not provided for 19 the Initiative's elements. Second, for the 11 
elements for which estimates were provided, we found that 8 were not 
clearly attributable to the Initiative because the reductions (1) were 
related to an activity already included in ongoing programs or (2) were 
not above previous or current levels. We did find, however, that the 
estimated reductions for the remaining 3 elements appear attributable 
to the Initiative.
    We have concerns about some of the 19 emission reduction elements 
for which the Administration did not provide savings estimates. At 
least two of these elements seem unlikely to yield emissions savings by 
2012. For example, the April 2003 fact sheet listed hydrogen energy as 
an additional measure, even though it also stated a goal of 
commercializing hydrogen vehicles by 2020, beyond the scope of the 
Initiative. Similarly, the same fact sheet listed a coal-fired, zero-
emissions power plant as an additional measure, but described the 
project as a 10-year demonstration; this means that the power plant 
would not finish its demonstration phase until the last year of the 
Initiative, much less be commercialized by then.
    Of the 11 elements for which estimates were provided, we found that 
the estimated reductions for 8 were not clearly attributable to the 
Initiative. In five cases, an estimate is provided for a current or 
recent savings level, but no information is provided about the expected 
additional savings to be achieved by 2012. For example, the 
Administration states that aluminum producers reduced their emissions 
by 1.8 million metric tons to meet a goal in 2000, but it does not 
identify future savings, if any. Similarly, it states that 
Agriculture's Environmental Quality Incentives Program, which provides 
assistance to farmers for planning and implementing soil and water 
conservation practices, reduced emissions by 12 million metric tons in 
2002. However, while the Administration sought more funding for the 
program in Fiscal Year 2003, it did not project any additional 
emissions reductions from the program.
    In two cases, it is not clear how much of the claimed savings will 
occur by the end of the Initiative in 2012. The requirement that cars 
and certain other vehicles have tire pressure monitoring systems is 
expected to yield savings of between 0.3 and 1.3 million metric tons a 
year when applied to the entire vehicle fleet. However, it will take 
years for such systems to be incorporated in the entire fleet and it is 
not clear how much of these savings will be achieved by 2012. 
Similarly, the required increase in light truck fuel economy is 
expected to result in savings of 9.4 million metric tons over the 
lifetime of the vehicles covered. Again, because these vehicles have an 
estimated lifetime of 25 years, it is not clear how much savings will 
be achieved by 2012.
    In one case, savings are counted for an activity that does not 
appear to be directly attributable to the Initiative. Specifically, in 
March 2001 (nearly a year before the Initiative was announced), EPA and 
the Semiconductor Industry Association signed a voluntary agreement to 
reduce emissions by an estimated 13.7 million metric tons by 2010. 
Because this agreement was signed before the Initiative was announced, 
it is not clear that the estimated reductions should be considered as 
additions to the already anticipated amount.
    Estimates for the remaining 3 of the 11 elements appear to be 
attributable to the Initiative in that they represent reductions beyond 
previous or current levels and are associated with expanded program 
activities. These are:

   Agriculture's Conservation Reserve Program was credited with 
        additional savings of 4 million metric tons a year. This 
        program assists farm owners and operators to conserve and 
        improve soil, water, air, and wildlife resources and results in 
        carbon sequestration.

   Agriculture's Wetland Reserve Program was credited with 
        additional savings of 2 million metric tons a year. This 
        program helps convert cropland on wetland soils to grassland or 
        forest and also sequesters carbon emissions.

   The Environmental Protection Agency's Natural Gas STAR 
        Program was credited with additional savings of 2 million 
        metric tons a year. This program works with companies in the 
        natural gas industry to reduce losses of methane during 
        production, transmission, distribution, and processing.

    More current information about certain of these elements and their 
expected contributions has been made public, but has not been 
consolidated with earlier information about the Initiative. For 
example, the Department of Agriculture's website includes a June 2003 
fact sheet on that agency's programs that contribute to carbon 
sequestration. Among other things, the fact sheet estimated that the 
Environmental Quality Incentives Program, cited above, will reduce 
emissions 7.1 million metric tons in 2012. However, we did not find 
that such information had been consolidated with the earlier 
information, and there appears to be no comprehensive source for 
information about all of the elements intended to help achieve the 
Initiative's goal and their expected contributions. The lack of 
consistent and comprehensive information makes it difficult for 
relevant stakeholders and members of the general public to assess the 
merits of the Initiative.
Administration's Public Documents Do Not Discuss Plans for Monitoring 
        Interim Progress
    According to the February 2002 fact sheet, progress in meeting the 
18-percent goal will be assessed in 2012, the final year of the 
Initiative. At that point, the fact sheet states that if progress is 
not sufficient and if science justifies additional action, the United 
States will respond with further policies; these policies may include 
additional incentives and voluntary programs. The fact sheets did not 
indicate whether the Administration plans to check its progress before 
2012. Such an interim assessment, for example, after 5 years, would 
help the Administration determine whether it is on course to meet the 
goal in 2012 and, if not, whether it should consider additional 
elements to help meet the goal.
    Mr. Chairman, this concludes our prepared statement. We would be 
happy to respond to any questions that you or Members of the Committee 
may have.
Contacts and Acknowledgments
    For further information about this testimony, please contact me. 
John Delicath, Anne K. Johnson, Karen Keegan, David Marwick, and Kevin 
Tarmann made key contributions to this statement.
                                 ______
                                 
                               Appendix I

Table 1.--Summary of Initiative's Elements Expected to Reduce Greenhouse
                              Gas Emissions
------------------------------------------------------------------------
     Number                              Measure
------------------------------------------------------------------------
 Providing tax incentives and programs for renewable energy and certain
                        industrial power systems
------------------------------------------------------------------------
             1   Tax credit for combined heat and power systems
------------------------------------------------------------------------
             2   EPA Combined Heat and Power Partnership
------------------------------------------------------------------------
             3   Department of Energy challenge to heat and power
                  industry
------------------------------------------------------------------------
             4   Tax credit for residential solar energy systems
------------------------------------------------------------------------
             5   Tax credit for electricity from wind and certain
                  biomass sources
------------------------------------------------------------------------
             6   Tax credit for electricity from additional biomass
                  sources
------------------------------------------------------------------------
             7   Tax credit for new methane landfill projects
------------------------------------------------------------------------
             8   Tax credit for new hybrid or fuel-cell vehicles a
------------------------------------------------------------------------
             9   Funding for geothermal energy
------------------------------------------------------------------------
            10   Renewable energy on public lands
------------------------------------------------------------------------
            11   Hydrogen energy
------------------------------------------------------------------------
            12   Coal-fired, zero-emissions electricity generation
------------------------------------------------------------------------
            13   Fusion energy
------------------------------------------------------------------------
                         Improving fuel economy
------------------------------------------------------------------------
            14   Advancing hydrogen-based fuel cells
------------------------------------------------------------------------
            15   Department of Energy public-private projects for low-
                  cost fuel cell technology
------------------------------------------------------------------------
            16   Fuel economy standards for light trucks
------------------------------------------------------------------------
            17   Tire pressure monitoring systems
------------------------------------------------------------------------
            18   High-efficiency automobile technology
------------------------------------------------------------------------
                 Promoting domestic carbon sequestration
------------------------------------------------------------------------
            19   Conservation Reserve Program
------------------------------------------------------------------------
            20   Environmental Quality Incentives Program
------------------------------------------------------------------------
            21   Wetland Reserve Program
------------------------------------------------------------------------
            22   Forest Stewardship Program
------------------------------------------------------------------------
               Challenging business to decrease emissions
------------------------------------------------------------------------
            23   EPA Climate Leaders Program
------------------------------------------------------------------------
            24   Semiconductor industry
------------------------------------------------------------------------
            25   Aluminum producers
------------------------------------------------------------------------
            26   EPA Natural Gas STAR Program
------------------------------------------------------------------------
            27   EPA Coal Bed Methane Outreach Program
------------------------------------------------------------------------
            28   AgSTAR Program
------------------------------------------------------------------------
            29   Ruminant Livestock Efficiency Program
------------------------------------------------------------------------
            30   Climate VISION Partnership
------------------------------------------------------------------------
Source: Data from Global Climate Change Policy Book, Feb. 2002; White
  House Fact Sheets, July 2002 and April 2003; analysis by GAO.
a Also listed in improving fuel economy category.


    The Chairman. Thank you very much, Mr. Stephenson.
    Mr. Walker, welcome.

              STATEMENT OF CHRISTOPHER T. WALKER,

       MANAGING DIRECTOR, GREENHOUSE GAS RISK SOLUTIONS,

                     ON BEHALF OF SWISS RE

    Mr. Walker. Good morning.
    Good morning, Mr. Chairman and Members of the Committee. We 
have submitted a written statement for the record.
    My name is Chris Walker. I am the Managing Director of the 
Greenhouse Gas Risk Solutions Team for Swiss Re in North 
America. Thank you for giving me this opportunity to discuss 
greenhouse gas emissions and its effect on climate change.
    Founded in 1963, Swiss Re is North America's largest 
reinsurer, and the world's second-largest reinsurer, and 
largest life and health reinsurer. The company is global, 
operating in 70 offices in 30 countries. We have 2,300 
employees in the U.S., and 9,000 worldwide.
    Natural catastrophes have always been a critical concern to 
the reinsurance industry. Swiss Re has paid claims on every 
major U.S. catastrophe since the 1906 California earthquake. No 
other single factor affects the bottom line of our industry or 
livelihood of our clients more than natural catastrophes. We 
believe that climate change has the potential to affect the 
number and severity of these natural catastrophes and have a 
significant impact on our business.
    Swiss Re supports strategies that protect the global 
climate system. The need to contain potential consequences of 
climate change calls for a precautionary global climate 
protection policy.
    Swiss Re congratulates Chairman McCain and his entire 
Committee for dedicating a significant portion of your busy 
agenda to this critical issue. In particular, we also thank 
Senator Nelson for his leadership in the past capacity as 
Florida insurance commissioner on this issue.
    Climate change natural disasters are forecasted to cost the 
world's financial centers as much 150 billion per year within 
the next 10 years, according to the U.N. Environmental 
Program's Finance Initiative Report of last year. Our analysis 
indicates that climate change will impact various insurance 
lines, such as property and casualty, due to potential 
increases in severity and frequency of storms, floods, 
droughts, et cetera. Also, though, on the life and health side, 
we may experience changes in mortality rates and disease 
factors.
    To enhance our understanding of this potential problem, 
Swiss Re is funding a study of the health impacts of climate 
change with Harvard Medical School's Center for Health and 
Global Environment, and the U.N.--United Nations Development 
Program.
    Swiss Re also supports measures to reduce greenhouse gas 
emissions by offering financial solutions to facilitate the 
market mechanisms that would be employed.
    At present, we see business at a crossroads for how to 
conduct operations in a carbon-constrained future. Responsible 
businesses are taking action, but do so blindly without 
governmental leadership on this issue.
    As a global reinsurer, we work to understand global trends. 
Because we operate throughout the world, we are in a unique 
position to witness what may not be seen, the consequences of 
change in climate on property, life, and health in the 
developing world.
    As an industry, we can raise awareness and change 
attitudes. We saw this firsthand last year when we participated 
in the carbon disclosure project with 35 other financial 
institutions constituting 4 trillion in investments. The 
project wrote to the world's 500 largest companies by market 
capitalization, asked them for the disclosure of investment-
related information concerning their greenhouse gas emissions. 
The CDP study found that 80 percent of respondents acknowledged 
the importance of climate change as a financial risk, but only 
35 to 40 percent were actually taking action to address the 
risks and opportunities. To us, this is not acceptable as 
management.
    Swiss Re has focused on risk from GHG emissions reductions 
to our own current customers. For example, we are focusing on 
the exposure potentially for directors and officers coverage. 
D&O insurance is professional liability insurance for directors 
and officers and members of senior management. Companies that 
are not complying with climate-change-related regulations could 
create personal liabilities for directors and officers. 
Noncompliance with these GHG reduction requirements potentially 
represents a significant risk. We consider GHG-related 
shareholder actions to be a distinct possibility in creating 
this risk; and, therefore, it is of concern to us.
    Worldwide policy measures to stimulate reductions in GHG 
emission are inevitable. From the emerging GHG regulations in 
the EU, Japan, and Canada, to the multitude of proposed U.S. 
Federal and state policies, as well as global NGO initiatives, 
the public and other stakeholders are exerting increasing 
pressure for concrete action. Some companies have taken up the 
challenge and are voluntarily reducing their emissions 
footprint, but a long and demanding learning curve awaits many 
companies who have not made the GHG reductions a part of their 
daily business practice.
    The issue of climate change is real, and we believe a 
domestic regulatory response is both necessary and inevitable. 
With this perspective in mind, we believe that we are better 
off as a company and industry if we develop an implement an 
effective moderate response now. If we wait five to 10 years, 
we may discover the need for a much more drastic and difficult 
response.
    Thank you for the opportunity to testify before the 
Committee. I am happy to answer any questions.
    [The prepared statement of Mr. Walker follows:]

    Prepared Statement of Christopher T. Walker, Managing Director, 
          Greenhouse Gas Risk Solutions on Behalf of Swiss Re
Introduction
    Good morning. My name is Chris Walker and I am the Managing 
Director of the Greenhouse Gas Risk Solutions team for Swiss Re in 
North America. Thank you for giving us this opportunity to discuss 
greenhouse gas emissions (GHG) and its effect on climate change.
    Founded in 1863, Swiss Re is North America's leading reinsurer and 
the world's second largest reinsurer and largest life and health 
reinsurer. The company is global, operating from 70 offices in 30 
countries. Swiss Re has three business groups: Property & Casualty 
reinsurance, Life & Health reinsurance and Financial Services. We have 
2,300 employees in the U.S. and 9,000 worldwide.
    Natural catastrophes have always been of critical concern to the 
reinsurance industry. Swiss Re has paid claims on every major U.S. 
catastrophe since the 1906 California earthquake. No other single 
factor affects the bottom line of our industry or the livelihood of our 
clients more than natural catastrophes. We believe that climate change 
has the potential to affect the number and severity of these natural 
catastrophes and result in very significant impact on our business.
    In 1994, Swiss Re published its first publication on climate 
change, ``Global Warming, Element of Risk''. At the time, there was 
still uncertainly as to whether global climate change could be 
influenced by human intervention. Today, we recognize that global 
warming is a fact. The climate has changed, visibly, tangibly and 
measurably. One only has to look at the extreme summer heat in Europe 
or severe draughts in the Western United States to understand that 
something has changed.
    The question is no longer whether the climate is changing, but how 
the occurring climate change will affect our existence, what 
conclusions can be drawn from it and what can be done to mitigate the 
impact.
    Swiss Re supports strategies that serve to protect the global 
climate system. The need to contain potential consequences of climate 
change calls for a precautionary global climate protection policy. 
Swiss Re congratulates Chairman McCain and his entire committee for 
dedicating a significant portion of your busy agenda to this critical 
issue.
Assessing the risks
    Climate change-driven natural disasters are forecasted to cost the 
world's financial centers as much as $150 billion per year within the 
next 10 years, according the UN Environment Program's (UNEP) finance 
initiative report.
    Our analysis indicates that climate change will impact various 
insurance lines of such as:

   Property and casualty insurance due to potential increases 
        in severity and frequency of storms, floods, droughts, etc., 
        and

   Life and health insurance may experience changes in 
        mortality rates and disease vectors. To enhance our 
        understanding of this potential problem, Swiss Re is funding a 
        study of the health impact of climate change, undertaken by the 
        Harvard Medical School's Center for Health and the Global 
        Environment \1\ and the United Nations Development Program.
---------------------------------------------------------------------------
    \1\ The Harvard Health Futures Project
---------------------------------------------------------------------------
Offering financial solutions
    Swiss Re supports measures to reduce GHG emissions. At present, we 
see business at a crossroads for how to conduct operations in a carbon-
constrained future. Responsible businesses are taking action, but do so 
blindly without government leadership on this issue.
    As a global reinsurer, we work to understand global trends. This 
may give us an advantage in considering the impact of long-term issues 
such as climate change and sustainability. Because we operate 
throughout the world, we are in a unique position to witness what many 
may not see--the consequences of changing climate on property, life and 
health in the developing world.
    The financial services industry, of which Swiss Re is a leading 
player, has an opportunity and an obligation to assist in solving this 
problem through its investment and business expertise. After all, 
dealing with climate change and commensurate emissions reductions are 
ultimately financial issues.
    Reinsurance can play a crucial role in grappling with broad 
societal issues. As an industry, we can raise awareness and change 
attitudes. We saw this first hand last year when we participated in the 
Carbon Disclosure Project with 35 financial institutions representing 
over $4 trillion in investments. The project wrote to the world's 500 
largest companies by market capitalisation asking for the disclosure of 
investment-relevant information concerning their greenhouse gas 
emissions. The CDP study found that while 80 percent of respondents 
acknowledge the importance of climate change as a financial risk, only 
35-40 percent were actually taking action to address the risks and 
opportunities. This is not acceptable risk mitigation.
    Reinsurers make a living in part by understanding and anticipating 
risks. As an example, Swiss Re has climatologists and atmospheric 
physicists on staff and last year published ``Opportunities and Risks 
of Climate Change.'' Once we understand the risks, we educate our 
clients and the public in an effort to mitigate these risks. GHG issues 
are just the latest example of an insurer addressing a risk that grows 
more prominent with every passing year.
Swiss Re's Greenhouse Gas Risk Solutions
    Swiss Re is an industry pioneer in identifying and incorporating 
risk and capital management to assist clients in dealing with emissions 
constraints in the most effective and cost efficient manner. We have 
endeavored to raise awareness of GHG risks and opportunities by hosting 
well-received and broadly-cosponsored conferences in 2001, 2002 and 
2003 at our Center for Global Dialogue in Ruschlikon, Switzerland and 
in 2002 in New York City. We are considering hosting an event in 
Washington, D.C. in 2004.
    In 2001,we created Greenhouse Gas Risk Solutions.\2\ This unit 
works to determine where, when and how Swiss Re can play a role in 
facilitating emissions reductions. For example, my unit focuses on 
several relevant activities:
---------------------------------------------------------------------------
    \2\ Please see: www.swissre.com/emissions for more detail

   Providing clearing and pooling insurance geared to removing 
        the counter-party and delivery risks that have hampered much of 
---------------------------------------------------------------------------
        early stage emissions trading potential.

   Raising the credit rating of renewable/alternate energy 
        projects through the insuring of construction, technical and 
        operational risks in projects. This insurance has the effect of 
        decreasing the cost of capital for greenhouse-gas-reduction 
        projects.

   Assisting GHG emission reductions with investment asset 
        management. For example, we are developing a project financing 
        mechanism for energy efficiency projects in Eastern Europe.

   In conjunction with the Commonwealth Bank of Australia, we 
        are developing a program for voluntary emissions reductions 
        activities for U.S. and European corporations.

    Swiss Re also focuses on risks from GHG emissions reductions to our 
current customers. For example, we concluded that an exposure 
potentially exists for Directors and Officers covers (D&O--Professional 
Liability insurance for senior management). Companies that are not 
complying with climate-change related regulations could create personal 
liabilities for directors and officers. Non-compliance with these GHG 
reduction requirements potentially represents a significant risk. We 
are educating companies and requiring them to address this issue to 
prevent losses. These actions are similar to those taken in the mid-
1990s before the Y2K crisis was commonly acknowledged. As we know, non-
compliance of IT systems would have caused untold losses to companies 
and shareholders. We consider GHG-related shareholder actions to be a 
distinct possibility.
    Swiss Re has prepared a Directors and Officers questionnaire to be 
completed during policy renewals for corporate clients. The companies 
are asked questions concerning emissions, emissions reductions plans 
and their climate change strategy. The information provided serves as a 
factor for our risk and underwriting assessment.
Emissions reductions efforts
    Worldwide, policy measures to stimulate reductions in GHG emissions 
are inevitable. From the emerging GHG regulation in the EU, Japan and 
Canada to the multitude of proposed U.S. Federal and state policies, as 
well as global Non Governmental Organizations initiatives, the public 
and other stakeholders are exerting increasing pressure for concrete 
action. Some companies have taken up the challenge and are voluntarily 
reducing their emissions footprint. But a long and demanding learning 
curve awaits many companies who have not made GHG reductions a part of 
their daily business practice. Unfortunately, for U.S. companies 
operating overseas they face certainty in being regulated for their 
emissions overseas but potentially a patchwork quilt of non-fungible 
future legislation and litigation at home.
    At Swiss Re we believe that environmental performance is one 
indicator of overall business performance. Experience has taught us 
that proactive steps to improve environmental performance leads to 
better bottom line results. In our view, environment and economics are 
inseparable, and, as with many things, the secret to success is finding 
the right balance.
    From Swiss Re's perspective, U.S. regulation of emissions has many 
benefits including better public health and environmental improvements. 
We believe the best way to lessen potential loss is through sound 
public policy utilizing market mechanisms which strike the right 
balance between environmental precaution and societal policy 
objectives.
Conclusion
    The issue of climate change is real, and we believe a domestic 
regulatory response is both necessary and inevitable. With this 
perspective in mind, we believe that we are better off as a company, 
and industry, if we develop and implement an effective moderate 
response now. If we wait 5-10 years, we may discover the need for a 
much more drastic and difficult response.
    Thank you for the opportunity to testify before this committee. I 
am happy to answer any questions you may have.

    The Chairman. Thank you very much, Mr. Walker.
    Mr. Stephenson, let me get this straight, from your 
statement. The Administration states that it plans to 
determine, in 2012, whether the goal of reducing emissions 
intensity was met? Is that a correct statement?
    Mr. Stephenson. Yes, and their goal is an 18 percent 
reduction in intensity.
    The Chairman. So I calculate that to be the end of 
President Cheney's first term.
    [Laughter.]
    The Chairman. 2012, the Administration will determine 
whether the intensity--not the amount, but whether the 
intensity of greenhouse gas emissions has been reduced.
    Mr. Stephenson. Right. And as you can see on the chart, 
they're simply slowing the growth of greenhouse gases, there's 
no reduction of greenhouse gas emissions.
    The Chairman. Well, I don't think we have to spend anymore 
time on the Administration's proposal.
    Mr. Podell, you paint a rather pessimistic picture about 
the prospects of this very important free-market initiative 
unless there is some kind of government-set regulation and 
goals. Is that fundamentally what you're saying here?
    Mr. Podell. Yes, Senator. I believe it's absolutely 
essential to get enough participants in the market so you've 
got a reasonable balance between buyers and sellers of 
emissions reduction credits.
    The Chairman. Have you seen what they're doing in the EU?
    Mr. Podell. Yes, I'm generally familiar with what they're 
doing in the EU.
    The Chairman. They seem to have a pretty thriving system 
going on there.
    Mr. Podell. They do. And it's largely because there is a 
regulatory thrust behind those activities.
    The Chairman. Because goals need to be met.
    Mr. Podell. Absolutely. There's a real regulatory stick 
that is involved in getting corporations and other participants 
to deal with the issue. Whether that's in England or whether 
that's in the emerging EU situation, there is a push from the 
regulators to get participation.
    The Chairman. Mr. Gorman, isn't it a little unusual for 
religious organizations to get involved in what is clearly a 
policy dispute here?
    Mr. Gorman. Well, I think, for us, it is primarily a 
religious and moral question, and that the details of 
legislation are really for you to work out. As I said, we are 
convinced that there is a clear scientific consensus. We're 
convinced there are fundamental values; intergenerational 
equity, stewardship, our sense of commitment to the future. 
This conversation cannot simply be a technical one, 
particularly inasmuch as it affects all of humankind.
    It is unusual for us to move forward across such a breadth 
of support, from Catholic bishops, the Jewish community, and 
evangelical Christians, but it's some measure of what we think 
is really the deepest, most fundamental issues that are being 
addressed here. And we're here to urge you to continue to 
address this dimension of the challenge.
    The Chairman. Mr. Walker, in your testimony--and I think 
it's an important point here--I quote, ``the analysis indicates 
that climate change will impact various insurance lines, such 
as property and casualty insurance, and life and health 
insurance.'' Go over again, one, what is that effect, and how 
is significant is it?
    Mr. Walker. We believe it's actually quite significant, or 
potentially quite significant. What's interesting is that it 
crosses the lines of business. Generally, in insurance, when 
you do calculations on exposures, you calculate what basically 
the exposure would be, say, for a storm hitting a certain 
region, for property values. What the climate change actually 
potentially presents is the opportunity or the problem of 
crossing lines into life and health issues, also, which, as the 
largest reinsurer on the life and health side in the world, we 
had not actually correlated with our other parts of the 
business, at least in our calculations, or potentially are not 
correlated. And so the concern is that you have potential loss 
of both the property and casualty--storms, floods, droughts--as 
well as life and health issues--disease factors, mortality 
rates, et cetera.
    The Chairman. The reason why it's an important point, Mr. 
Walker, is that we're always discussing, and appropriately, the 
cost of any regulations or mandatory reductions in greenhouse 
gases and other pollutants, but we very rarely discuss the 
impact of doing nothing. And I think that that's an important 
factor, not just the cataclysmic floods, et cetera, but the 
cost of insurance, the cost of rebuilding homes, the cost of 
moving. Senator Stevens, of Alaska, mentioned that some of the 
Indian tribes have had to move from where they were, inland.
    So I think that perhaps what's missing from this debate, to 
some degree, is not only the cost of doing something, but the 
costs that are associated with doing nothing. And that's why I 
thank you for your testimony here today.
    Senator Lautenberg?
    Senator Lautenberg. Thanks, Mr. Chairman.
    I wanted to ask Mr. Walker a question, also. Has Swiss Re--
if you can tell us this--looked to offload the areas of 
coverage that it's presently taking care of on a reinsurance 
basis? Is it suggested within the company that you'd rather 
apply your opportunities in other places? Are there any other 
nations, besides America, that run less risk than we do from 
the results of the global warming, let's say, over the next 
decade?
    Mr. Walker. I would say we have not, at this point, looked 
to, say, make a region uninsurable at this point in time. It 
certainly could be a consideration down the line. I think there 
is some historic record, not from Swiss Re's point of view, but 
what the Outer Banks of North Carolina, for instance, in the 
Dune Road section of the Hamptons, for instance, being 
uninsurable, as far as commercially insurable, due to just 
frequency of storms.
    Senator Lautenberg. Well, then, how about lines of 
business? Has that been--well, obviously, if you're saying 
areas are uninsurable, that's an option the company has, in 
terms of providing its backup insurance, the reinsurance, that 
is required. So you take those risks.
    Mr. Walker. Well, certainly, I mean, that would be an 
option in the future. I mean, to echo what Senator McCain said, 
I think the ability or the availability of insurance in certain 
regions may get affected in the future.
    Senator Lautenberg. Yes.
    Mr. Walker. And I think that is going to be a big, very 
significant factor for the economy at some point in time.
    The Chairman. Senator Lautenberg, could I interrupt? I have 
to go to the floor on the Iraqi issue. And could you conclude 
and shut it down?
    And my thanks to the witnesses for their valuable input. I 
thank you for being here today. I think this has been a very 
good hearing.
    Senator Lautenberg. And I'll take not more than 10 minutes, 
I promise.
    The Chairman. Thank you.
    Senator Lautenberg [presiding]. I happen to be familiar 
with one of the places that you mentioned in your testimony, 
and there is some very expensive real estate there. That area 
has been subjected to flooding in the past, as you know, 
because it sits between two bodies of water, the ocean and bay. 
I would imagine that you'd have to examine the kinds of 
coverage that you're going to give in these vulnerable areas.
    Mr. Podell, the Chicago Climate Exchange--interesting 
idea--but this one of the places where you've built it and they 
still haven't come, realistically. And that challenges an adage 
that we hear, once you get it going.
    From your experience, can you think of any scenario in 
which the Administration's voluntary reductions policy would 
help accomplish the goals of the Exchange?
    Mr. Podell. Well, as a practical matter, how long are you 
prepared to wait? Timing is rather critical here. I supposed 
it's conceivable that five, six, 10 years from now, if we just 
sort of limp along and do nothing, well, you know, clearly 
there may well be an increase in membership to a voluntary 
trading platform like the Climate Exchange. I think that's 
possible.
    But what I think is missing now is that, sort of, critical 
push or impetus to get corporate America, in meaningful 
numbers, to participate in the Exchange. One makes all the 
arguments, as I outlined in my testimony, and many of which are 
persuasive and empirically true; but without there being a 
requirement on corporations to really cap and reduce their 
emissions, you're not going to get meaningful participation.
    Senator Lautenberg. I agree. I came out of the corporate 
world before I came to the Senate, and I know something about 
that. I was at the 1992 conference in Brazil and saw the 
complaints registered by other countries. When the American 
representatives complained, about the forest-burning for 
farming and habitation, that kind of thing, the response was, 
``One of your workers in a chemical factory does more to damage 
the environment than one of our farmers taking an acre of 
forestland and burning it.'' And, ``If you want to keep them 
from making a living,'' was the response of an interior 
minister at one of the countries, ``then you should, by all 
means, provide the funds and perhaps we can let the forests go 
as they are.'' Stark reality. And I'm one of those very 
disappointed in the response that we, as a country, have taken 
to what I consider emergency needs that face us.
    I've got nine grandchildren, another one on the way, and 
they're all very young. The one thing that I can leave them as 
a legacy that has durability, is to make sure that the air is 
clean, that they can fish and play in the water, that they can 
play on all kinds of ground that our wonderful industrial 
revolution left so toxic that we can't go near it. So this has 
been a large concern of mine.
    I want to ask you, Mr. Gorman--the impact of the problems 
of the results of neglect of this problem probably affect 
different economic classes of the world's population. Could 
you, in a few words, describe what happens to perhaps the 
poorest of the poor?
    Mr. Gorman. Thank you for asking that, Senator.
    You mentioned your grandchildren. I don't have to go any 
further than today's Washington Post, which compiles reports 
from the Associated Press and Reuters, and I'll just read two 
paragraphs, `` `About 160,000 people die every year from the 
side effects of global warming, which range from malaria to 
malnutrition, and the numbers could almost double by 2020,' a 
group of scientists said yesterday. The study by scientists at 
the World Health Organization and the London School of Hygiene 
and Tropical Medicine said, `Children in developing nations 
seem most vulnerable.' ''
    Senator Lautenberg. That is as a result of sticking your 
head in the sand and letting events go by.
    Mr. Stephenson, thank you for your presentation. I've got a 
couple of charts here. Any one of them reflects what the 
greenhouse--the gray line, the greenhouse intensity percent 
under the White House proposal, kind of, to paraphrase, ``live 
and let die.''
    [Laughter.]
    Senator Lautenberg. I just invented that.
    [Laughter.]
    Senator Lautenberg. The red line is the increase in 
emissions and the projected real GDP percentage change under 
White House Fiscal Year 2003 budget. Look at the contrast here, 
how much attention we pay to it and the reality of the growth 
and the projected effects of the present policy. And this is 
the defining, the more markedly identified, of the intensity 
factor, just headed down at it looks like in a rapidly 
accelerating rate, if you just look out years. And the increase 
of emissions in--the GDP percents, thank you.
    It's, again, a kind of a fantasy that persists around here 
that somehow or other things will get better if we do nothing. 
This is like having a very high fever or persistent coughing or 
some other physical symptom that sometimes send a person to the 
doctor, sometimes to the hospital, and sometimes, it's too 
late. We're practicing the same thing on a larger scale. I'm 
hoping that there is some way--and I commend Senator McCain for 
his interest, and Senator Lieberman. And I guess the conclusion 
that we have to draw is that we'd better do something soon.
    One of the things, when we had the scientists sitting 
there, I wanted to ask was, If we talk about changes in the 
ecosystem or changes that are not visible immediately, what 
might the short-term--look out 10 years from now--what can be 
the immediate effects? Higher water levels? Discomfort from the 
increasing temperatures? What else might we say that could take 
effect in your studies or your own view?
    Mr. Stephenson? Anybody. Mr. Walker?
    Mr. Walker. Well, actually, the comment I would add is, for 
instance, changing disease factors. Paul Epstein, up at 
Harvard, Dr. Paul Epstein, has done a lot of work on changes in 
disease factors, such as West Nile virus, for instance, which 
had never appeared in the U.S. prior to the late 1990s. And 
those type of changes, you're seeing the effects. For instance, 
they had an outbreak of malaria in Toronto last year. Those 
type of changes, which they are unprecedented. And, in one 
sense, it's the easiest way, I would say, that you can explain 
climate change to someone, because it's very personal. They see 
these changes. They see these things that have not--that are 
out of the norm, that have not been a part of human experience, 
in a sense, in our lifetimes of experiences.
    Senator Lautenberg. Anybody else want to----
    Mr. Gorman. Crop failure.
    Senator Lautenberg. Huh?
    Mr. Gorman. Crop failure.
    Senator Lautenberg. Crop failures could happen 
significantly within the next decade. We've seen it happen.
    Mr. Stephenson, any comment from you?
    Mr. Stephenson. I can't answer that question. I think you 
need the science panel back. But, in general, changes in 
climate, you know, in certain areas----
    Senator Lautenberg. Dr. Schneider is back there. He 
smiling. But I can't do that.
    Mr. Stephenson. I know. Certain areas that might have been 
farmable may no longer be, in the future. There is very real 
change, let alone to the wildlife, but to the health of the 
humans.
    Senator Lautenberg. I will take my leave as interim 
Chairman and turn it over to my colleague, Bill Nelson, and say 
thank you very much, each one of you, for the contributions 
you're making by being here.
    Senator Nelson (presiding). You know, Senator, I've been 
looking forward to being Chairman of the Commerce Committee.
    [Laughter.]
    Senator Lautenberg. Would the Florida turnpike be getting 
wider?
    [Laughter.]
    Senator Nelson. Are we ready to mark up the bill?
    [Laughter.]
    Senator Nelson. I'd like to ask Mr. Walker some of the 
questions that I posed to the earlier panel about mid-1990s 
insurance companies weren't interested. Your company obviously 
has surveyed the rest of the companies for me.
    Mr. Walker. Well, it's actually a very good point that you 
made. I'm asked this question very often, and I guess I would 
explain two things. For instance, why Swiss Re, and where 
others are. I think part of why Swiss Re is involved is, as a 
reinsurer, we generally think a few years ahead of the curve. 
It's just the nature of our business. We have long-term 
relationships, generally, with our insurance companies, so we 
have to think three to 5 years out of the box. So, generally, 
reinsurers are a little further ahead. And Munich Re, for 
instance, as the largest reinsurer in the world, is very 
similar to us in their thinking on climate change.
    But there's also a difference between European and U.S. 
insurance companies, and the Europeans have gotten this a lot 
quicker. They believe it's happening. The European insurance 
industry, while not as active as they could be, is starting to 
get there. If you just had to look at the financial 
initiatives, it's all European insurance companies and I think 
one or two U.S.
    For the U.S. companies, it's very interesting, certainly 
from the business unit that I run, which looks at--looking at 
the greenhouse gas emissions issue, there his no counterpart of 
mine at all in the U.S. to speak with. The U.S. insurance 
industry has not even looked at the emissions reduction issue, 
let alone acknowledge climate change, per se. It's still a long 
way off, and I'm not sure why the reticence is. I believe if 
you ask them, on an underwriting basis, they are factoring in 
climate trends into their underwriting, but they're very 
reluctant to speak publicly about it.
    Senator Nelson. What's it going to take to get American 
insurance companies to recognize this is a threat to their 
bottom line?
    Mr. Walker. Very good question. I'm not sure. Certainly, 
from an emissions issue, if there was legislation of some kind, 
there is a lot of business opportunities, as well as risks, for 
insurance companies. And the insurance industry will be fast, I 
think, to come into it, believing that there's a role for 
insurance to facilitate market mechanisms, trading, offset 
projects, et cetera.
    On climate change, itself, I do believe they're factoring 
it in, and it's just a matter of, I guess, some leadership in 
some of the major insurance companies to actually come out 
publicly and state that this is something they're already doing 
so they'd believe it's happening. But so far we haven't seen 
it, to be real frank.
    Senator Nelson. Well, that's what I certainly found out.
    Mr. Gorman, to quote the ancient scriptures, ``The Earth is 
the Lord's, and everything in it.'' Why do you think that so 
many people in the faith community do not have that 
recognition, that understanding, which you had quoted to us in 
several different passages in your testimony?
    Mr. Gorman. Well, Senator, thank you for that question, and 
I'll be leaving now.
    [Laughter.]
    Mr. Gorman. I think the most relevant categories for this 
issue are fear, and--fear that there really isn't enough to go 
around, and faith, you know, that if we are prepared to move 
forward steadily in the direction of generosity and 
collaboration and solidarity, that it can move to the benefit 
of all. And I think, finally, it's really an issue of 
leadership, which you all address here. I don't think people in 
the faith community are any more or any less generous or 
selfish than anyone else. I think we are most moved by examples 
of love and compassion and caring for one another. And I think 
the unique contribution of the environmental challenge to 
religious life is that it holds up the totality of creation as 
something that we have some responsibility for future 
generations. People love what they most know, and people love 
their--the forests nearby and the farms and crops that might be 
lost and the children, whose well-being might be sacrificed.
    We really see this issue as an issue that invites people to 
expand their vision and move from their hearts, out of their 
love for all of creation. And then we move forward. You know?
    Senator Nelson. I would merely reflect, in conclusion, as 
we conclude this hearing, the image that is seared in my mind's 
eye of the view out the window of our spacecraft back at Planet 
Earth on the 24th flight of the space shuttle, when I was 
privileged to fly, of the Earth looking so beautiful and yet so 
fragile, so colorful, so creative, so much of a creation in the 
midst of nothing. Space being nothing. Space, an airless vacuum 
that goes on and on for billions of light years. And there's 
home. And home is the planet.
    And with the naked eye, you can see how we are doing some 
of the destruction. For example, coming across South America, I 
could see--because of the color contrast, I could see where the 
rainforest was being destroyed, and then I could look to the 
East, to the mouth of the Amazon, and I could see the result of 
that, for the waters of the Atlantic were discolored for 
hundreds of miles from the silt that was coming down. Going 
over Madagascar, every outlet of every stream or river into the 
ocean was nothing but a discolored mass of silt as a result of 
the destruction of the vegetation on that island.
    And I'll tell you what it did for me. It made me want to be 
a better steward of our planet, having seen it from that 
perspective.
    Naturally, it's very difficult to have an experience like 
that and not have some spiritual dimension to it, as well. And 
that's why I was so struck by your comments, your testimony, 
that I think that there really is something to that, that 
people of faith ought to realize that we have a responsibility 
to be good stewards. That's why I want to see us go to Mars 
with a human mission, because I want to see if there are dry 
river beds and if there was water. And if water was there, was 
there life? And if life was there, was it developed? And if it 
were, was it civilized? And if it was, what happened? And how 
can we learn to be better stewards of what we have by finding 
out some other experience in the cosmos?
    So, with those lofty thoughts, thank you all for 
participating.
    The hearing is adjourned.
    [Whereupon, at 11:45 a.m., the hearing was adjourned.]
                            A P P E N D I X

               Prepared Statement of Hon. John F. Kerry, 
                    U.S. Senator from Massachusetts
    First, I want to thank Chairman McCain and Ranking Member Hollings 
for their continued interest in this subject and their support for 
holding this hearing.
    Today we will hear from a distinguished group of individuals 
representing a wide variety of interests and sectors, including the 
European Union, eminent scientists, the General Accounting Office, the 
religious community, and the business and insurance sectors. Yet 
despite this wide variety of interests and perspectives, these 
witnesses appear to agree on one thing: that climate change poses a 
very real--and not an imaginary--threat to our environment, to our 
livelihoods, and to our well-being, and that concrete action must be 
taken now if we are to ever address the problem.
    This Committee has held hearings on climate change now for many 
years, spanning multiple Congresses. And the one thing that has become 
clear is that there should be no dispute that human activities are a 
significant cause of global warming.
    The United States has a global responsibility to be a leader in 
finding effective solutions to this problem, as we are responsible for 
25 percent of all the greenhouse gases produced worldwide. Yet the 
policies of the Bush Administration appear to have taken several steps 
backwards, away from real solutions.
    First, as is well known, soon after taking office, President Bush's 
Administration backed away from U.S. international commitments to 
support the Kyoto protocol on climate change that establishes measures 
for reducing greenhouse gases. At that time, the Administration still 
seemed to recognize that climate change was a real problem, and that 
human activities were connected to this phenomenon. In 2001, at the 
first hearing we held during the new Bush Administration, Dr. David 
Evans, a respected scientist and head of NOAA Research, presented 
compelling evidence that reaffirmed the steady growth in atmospheric 
CO2--``increasing by more than 30 percent over the 
industrial era compared with the preceding 750 years''. Dr. Evans 
summarized his assessment of the science in this way, ``[E]missions of 
greenhouse gases and aerosols due to human activities continue to alter 
the atmosphere in ways that are expected to affect the climate.'' He 
also said ``stabilizing concentrations means that we must ultimately 
end up with much lower net emissions.''
    Since Dr. Evans testimony before this Committee two years ago, the 
scientific evidence of increasing global temperatures associated with 
increasing atmospheric levels of CO2, and the associated 
threats to our people and our environment, has continued to grow. 
Although the Administration tried to raise questions about the 
credibility of the most recent global science report of the IPCC, its 
own report, U.S. Climate Action Report--2002, only adds to the volume 
of evidence.
    In response to recent attacks on the validity of science linking 
human activities to climate change, over 800 U.S. scientists declared 
their support for the latest findings of the IPCC and the National 
Research Council (NRC) with respect to climate change in an open letter 
to Senate majority and minority leaders Frist and Daschle (July 29, 
2003). These findings include the conclusion that anthropogenic climate 
change, driven by emissions of greenhouse gases, is likely responsible 
for most of the observed warming over the last 50 years and that the 
Earth is expected to warm an additional 2.5 to 10.5 +F in the next 
century.
    The Administration promised leadership in promoting an 
international alternative to the Kyoto protocol. However, such a 
proposal simply never materialized. Instead, in early 2002, the U.S. 
unveiled its own domestic strategy to address climate change: reducing 
``greenhouse gas intensity''. The strategy calls for reductions to be 
achieved entirely through voluntary measures. As part of the strategy, 
the President has called for a review of progress in 2012 to determine 
if additional steps may be needed to achieve further reductions in out 
national greenhouse gas emission intensity, but has not set forth any 
proposal requiring mandatory steps to lower greenhouse gas emissions 
through 2012.
    At a hearing held by this Committee last year, James Connaughton, 
Chair of the White House Council on Environmental Quality, testified 
that this ``greenhouse gas intensity'' approach would lead to 
increasing emissions. This should not come as a great surprise, given 
that the approach simply reduces the ratio of emissions to gross 
national product. The testimony today from the General Accounting 
Office confirms that not only will this approach continue to increase 
total emissions, but the entire ``plan'' is a sham--there are few 
concrete steps being taken, and no mechanisms in place to monitor any 
progress. Incredibly, apart from announcing this voluntary approach, 
the next step we can expect from the President's team is that they will 
be ``checking back with us'' in the year 2012! Truth in advertising 
would require this to be called the Bush ``business as usual'' plan.
    Let me say, that there are many of us in the Congress--Democrats, 
Republicans, and Independents--who were very disappointed that the 
President turned his back on his campaign commitment to address the 
problem of CO2 emissions when he took office. The United 
States is the largest producer of CO2 in the world--
utilities and transportation account for two-thirds of our emissions. 
Yet, this Administration fails, repeatedly, to acknowledge the threat 
of increasing CO2 emissions or to present to the Congress 
any real policies, programs, or strategies to deal with this threat. To 
their credit, states have leapt into the void--Massachusetts adopted 
the first CO2 cap and trade program, and now California has 
passed a law to reduce greenhouse gas emissions from automobiles.
    There will always be some ``uncertainty'' in science--but it is not 
an excuse for no action in the face of risk. We cannot delay.
    But it's worse than delay--we are slipping backward. The 
Administration's Energy Policy seeks to promote national energy 
security by simply increasing the development of oil, gas, coal, and 
other fossil fuels for energy production. The Administration has 
officially opposed any provisions in the energy bill that would address 
climate change, has pressed back on provisions that promote renewable 
sources of energy, and other measures that are aimed at responsibly 
fixing this problem. By contrast, states and other nations are moving 
forward with concrete plans. I am particularly pleased that a 
representative from the European Commission has come to inform the 
Committee of its plans to institute greenhouse gas emissions reductions 
and begin its cap and trading program as soon as 2005.
    In sum, this is an issue that cannot be ignored, and action is 
being taken on many levels. Yet this Administration is not only putting 
its head in the sand, but its policies--by its own admission--will lead 
to an increase in emissions of greenhouse gases by the United States. I 
commend the witnesses today for appearing before the Committee to 
inform us what is going on in the real world--of science, policy, and 
business--on the question of what action is needed to address climate 
change.
                               Attachment






























































                                 ______
                                 
    Response to Written Questions Submitted by Hon. John McCain to 
                   Antonio J. Busalacchi, Jr., Ph.D.
    Question 1. As you mentioned in your testimony, National Academy of 
Sciences member Ralph J. Cicerone of the University of California at 
Irvine was quoted in the Washington Post article on the ice-shelf 
breakup as saying:

        ``But even though this ice melt and permafrost thawing 
        [probably happened] too fast to be due to global warming, this 
        is [a] prototype of what we should expect after the next few 
        decades. . . . This is a good dress rehearsal for the kinds of 
        things we could see later.''

    Do you agree with this statement and can you elaborate?
    Answer. Yes, I do agree with this statement. There is general 
consensus among climate scientists that the magnitude of climate change 
will be greatest in the Arctic, potentially resulting in significant 
changes to the Arctic sea ice cover. This general agreement is derived 
in part from numerous general circulation model projections that 
indicate that the Arctic climate is particularly sensitive to global 
warming. In addition, we have some observations showing that changes 
may already be taking place in the Arctic. Analysis of recently 
declassified data from U.S. and Russian submarines indicates that sea 
ice in the central Arctic has thinned since the 1970s, and satellite 
data indicate a 10-15 percent decrease in summer sea ice concentration 
over the Arctic as a whole. Satellite measurements also indicate that 
the time between the onset of sea-ice melting and freeze-up has 
increased significantly from 1978 through 1996, and the number of ice-
free days have increased over much of the Arctic Ocean. A decline of 
about 10 percent in spring and summer continental snow cover extent 
over the past few decades also has been observed. Looked at in total, 
the evidence paints a reasonably coherent picture of change, but the 
conclusion that the cause is greenhouse warning is still open to 
debate; many of the records are either short, of uncertain quality, or 
provide limited special coverage.

    Question 2. You mentioned in you statement that greenhouse gases 
are accumulating in Earth's atmosphere as a result of human activities, 
causing surface air temperatures and subsurface ocean temperatures to 
rise.

    (a) What type of environmental impacts can we expect from rising 
surface air temperatures and subsurface ocean temperatures?
    Answer. A number of secondary effects are expected to accompany 
changes in global mean temperature. These include increases in rainfall 
rates and increased susceptibility of semi-arid regions to drought. For 
example, warmer temperatures would increase evaporation rates and 
thereby accelerate drying of soils following rain events. This effect 
will likely be most important in semiarid regions such as the Great 
Plains. The impacts of these changes will depend on the magnitude of 
the warming and the rate with which it occurs.

    (b) Are these impacts consistent with the other type of events such 
as Ward Hunt Ice Shelf breakage and the shifting of certain species of 
plants, insects, birds and fish to higher latitudes which you described 
in your testimony?
    Answer. Yes.

    Question 3. Can you elaborate on why the Arctic region in 
considered the ``canary in the coal mine?''
    Answer. As mentioned in the response to the first question, there 
is general agreement that the magnitude of climate change will be 
greatest in the Arctic, potentially resulting in significant changes to 
the Arctic sea ice cover. Thus, we might expect to see significant 
impacts of climate change first in the Arctic.

    Question 4. In July 2002, Dr. John Marburger, the Director of the 
Office of Science and Technology Policy, testified before this 
Committee about the 2001 National Academy Report that ``Even a cursory 
reading of the report indicates that the uncertainties are real and 
they are significant.'' In your statement, you state that ``Despite the 
uncertainties, however, there is widespread agreement that the observed 
warming is real and particularly strong within the past twenty years.'' 
What factors have led to the ``widespread'' conclusion that the Earth's 
climate is really warming?
    Answer. As is explained in the 2001 National Academy Report Climate 
Change Science, there is wide scientific consensus that climate is 
indeed changing. Greenhouse gases are accumulating in Earth's 
atmosphere as a result of human activities, causing surface air 
temperatures and subsurface ocean temperatures to rise. This conclusion 
is based on the instrumental record of surface air temperatures and 
subsurface ocean temperatures for the recent past. Instrumental records 
from land stations and ships indicate that global mean surface air 
temperature warmed about 0.4-0.8 degrees C (0.7-1.5 degrees F) during 
the 20th century. The ocean, which represents the largest reservoir of 
heat in the climate system, has warmed by about 0.05 degrees C (0.09 
degrees F) averaged over the layer extending from the surface down to 
10,000 feet, since the 1950s. In addition to these direct measurements, 
proxy records--which can be derived from ice cores, tree rings, and 
corals--indicate that today's global mean temperatures and levels of 
carbon dioxide (CO2), a key greenhouse gas, are at their 
highest levels of the last 450,000 years. The observed change in 
temperature is consistent with our understanding of how Earth responds 
to greenhouse gases present in the atmosphere.
    A diverse array of evidence supports the view that global air 
temperatures are warming. The warming trend is spatially widespread and 
is consistent with the global retreat of mountain glaciers, reductions 
in snow-cover extent, the earlier spring melting of ice on rivers and 
lakes, the accelerated rate of rise of sea level during the 20th 
century relative to the past few thousands years and the increase in 
upper-air water vapor and rainfall rates over many regions. A 
lengthening of the growing season also has been documented in many 
areas, along with an earlier plant flowering season and earlier arrival 
and breeding of migratory birds. Some species of plants, insects, birds 
and fish have shifted toward higher latitudes or higher elevations, 
often together with associated changes in disease vectors.
                                 ______
                                 
 Response to Written Questions Submitted by Hon. Ernest F. Hollings to 
                   Antonio J. Busalacchi, Jr., Ph.D.
The Need for Science and Technical Advice in Congress
    From 1972 to 1995, Congress had its own bipartisan, scientific and 
technical analysis organization called the Office of Technology 
Assessment (OTA). The office was shut down for economic reasons. The 
OTA's function was to do analysis for committees and to provide 
consultations for congressional staff and members, providing a needed 
level of expertise on complex science and technology issues.

    Question 1. If such an advisory office still existed, do you think 
it would benefit Congressional understanding of climate change science 
(i.e., is it the nature of the science causing debate or is it the 
people interpreting the science)?
    Answer. The leadership of the National Academy of Sciences 
supported the original creation of OTA and was on the record for the 
preservation of the OTA at the time of its cancellation. If OTA were in 
existence today, it would certainly be able to play a positive role in 
providing Congress with additional understanding of the scientific 
aspects of climate change science.

    Question 2. Do you see a need for increased scientific advice at 
the congressional level?
    Answer. The National Academy of Sciences has long supported the 
need for multiple means for providing scientific advice to Congress, 
the Executive Branch, and the American public.

    Question 3. Do you think the National Academy of Sciences, 
universities, and other institutions successfully fill the gap left by 
the removal of the OTA, with respect to climate change?
    Answer. The National Academy of Sciences and other institutions 
have served a valuable and successful effort to inform the Congress 
since the demise of OTA. However, the absence of OTA has been a real 
loss for Congress because OTA was an important and useful source of in-
house scientific and technical advice for committees and members. OTA 
reports were produced by a different process from that of reports from 
the National Academies. The National Academies found OTA reports to be 
informative and useful for our own work.

    Question 4. Do you think the lack of scientific and technical 
expertise at the congressional level puts us at a disadvantage? How 
about at the international level?
    Answer. In a complex and important issue such as climate change, it 
could be said that there is no such thing as too much objective and 
high quality scientific information and advice.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. John F. Kerry to 
                   Antonio J. Busalacchi, Jr., Ph.D.
Delay of Action and Costs to Society
    Despite the President's declaration to cut U.S. greenhouse gas 
intensity by 18 percent in the next ten years, we have heard in 
previous testimony from Mr. James Connaughton, head of CEQ, that his 
proposal will result in steadily increasing GHG emissions.

    Question 1. Speaking as a scientist, doesn't each decade that we 
delay in reducing greenhouse gas emissions commit us to enduring 
greater warming in the future and make it exceedingly difficult to 
stabilize atmospheric GHG concentrations?
    Answer. The course of future climate change will depend on the 
nature of the climate forcing (e.g., the rate and magnitude of changes 
in greenhouse gases, aerosols) and the sensitivity of the climate 
system. Each decade that we continue to emit greenhouse gases commits 
the Earth to some amount of warming. Indeed, because of inertia in the 
climate system, we are already committed to some warming due to 
emissions during the last century. Model projections have been 
conducted that compare the impacts of continued increases in greenhouse 
gas emissions to those of stabilizing greenhouse gas emissions at 
levels below the business-as-usual case. The models in which emissions 
continue to increase show more significant impacts than those where 
emissions are stabilized.

    Question 1a. Doesn't this mean that either mitigation or adaptation 
will come at a much greater cost to society in the future?
    Answer. I am not an expert in the economic impacts of different 
climate change response options and the National Academies have not yet 
conducted any studies on this topic. Economic analysis of response 
options is the type of research that should be supported at the 
interface of the U.S. Climate Change Science Program and the U.S. 
Climate Change Technology Program
    Voluntary Approach and UNFCC
    As you know, the U.S. signed and ratified the UN Framework 
Convention on Climate Change in 1992, which set as its goal 
``stabilization of greenhouse gas concentrations in the atmosphere at a 
level that would prevent dangerous anthropogenic interference with the 
climate system.''
    The UNFCC further stated that ``such a level should be achieved 
within a time frame sufficient to allow ecosystems to adapt naturally 
to climate change. . . '' . But according to testimony before this 
Committee in July of last year and the U.S. Climate Action Report, U.S. 
greenhouse gas emissions will increase under the Bush plan by 43 
percent between 2000-2020, despite improvements in greenhouse gas 
intensity.

    Question 2. Is the ``emissions intensity'' voluntary approach to 
greenhouse gas emission reductions currently advocated by the 
Administration is sufficient to put us on track to achieve greenhouse 
gas stabilization in a timely manner?
    Answer. Present increases in greenhouse gas emissions are 
incompatible with greenhouse gas stabilization.

    Question 2a. If we continue on the current path--with emissions 
rising annually--when would we achieve this goal? Ever?
    Answer. It is difficult to answer this question because scientists 
are still trying to determine what level of greenhouse gases in the 
atmosphere would ``prevent dangerous anthropogenic interference with 
the climate system.'' At this time, the goal is only qualitative and 
therefore doesn't lend itself well to a quantitative response. In fact, 
no single threshold level of greenhouse gas concentrations in the 
atmosphere exists at which the beginning of dangerous anthropogenic 
interference with the climate system can be defined. Some impacts have 
already occurred, and for increasing concentrations there will be 
increasing impacts. The unprecedented increases in greenhouse gas 
concentrations and those anticipated in the future, constitute a real 
basis for concern.

    Question 2b. Can actual emissions reductions on such scale and 
time-frame be achieved solely through any type of voluntary action?
    Answer. The utility of voluntary emissions control programs is a 
matter of socioeconomic research, outside my expertise in climate 
science.
                                 ______
                                 
 Response to Written Questions Submitted by Hon. Ernest F. Hollings to 
                          Dr. Tom M.L. Wigley
The Need for Science and Technical Advice in Congress
    From 1972 to 1995, Congress had its own bipartisan, scientific and 
technical analysis organization called the Office of Technology 
Assessment (OTA). The office was shut down for economic reasons. The 
OTA's function was to do analysis for committees and to provide 
consultations for congressional staff and members, providing a needed 
level of expertise on complex science and technology issues.

    Question 1. If such an advisory office still existed, do you think 
it would benefit Congressional understanding of climate change science 
(i.e., is it the nature of the science causing debate or is it the 
people interpreting the science)?
    Answer. I was one of those very saddened, Senator Hollings, when 
the OTA was eliminated. having worked with many of its staff on climate 
and energy issues over the years. They checked facts, reviewed the 
literature broadly and produced credible assessments--not always liked 
by those who preferred spin to balanced assessment. Fortunately, in the 
climate arena at least, there are many other assessment bodies of high 
credibility you can turn to, even in the absence of a good in-house 
body like OTA was. These include the Intergovernmental Panel on Climate 
Change (IPCC) internationally (but with major U.S. scientific and 
administrative input), and the U.S. National Research Council, whose 
many reports say virtually the same things about the science and 
impacts of climate as the IPCC. That is, both reflect the strong 
consensus of mainstream climate scientists on the likelihood of human 
interference in the natural climate and its potential for some 
problematic outcomes if we do not attempt to slow down this threat--via 
policies, like the McCain Lieberman bill. Of course, the assessments do 
not take positions on particular policies, except to evaluate the 
differential climatic implications of various options.

    Question 2. Do you see a need for increased scientific advice at 
the congressional level?
    Answer. I think the greatest need is to have a reasonable debate of 
parties who put the nature of the science above special interests. 
Unfortunately, the latter have dominated both the media and 
congressional hearing rooms for 15 years with a cacophonous ``end of 
the world'' versus ``good for you'' debate over climate change, though 
the vast bulk of the knowledgeable scientific community would rate the 
two polar extremes as the lowest probability outcomes. My personal wish 
is you could hear nothing but opinions of those dedicated to honest and 
balanced assessment of the literature rather than the selective 
special-interest spin all too prevalent in debates on climate change 
over the past 15 years. I appreciate your questions, and admit a great 
personal frustration being constantly forced to respond to non-
scientific polemics from those dabbling in climate science with an 
agenda and spouting seemingly technically competent arguments that 
would not pass muster at any decent per reviewed journal. Fortunately, 
the IPCC and NRC are mega peer reviewed, and are clearly the most 
credible sources for Congress right now on climate and other related 
technical issues.

    Question 3. Do you think the National Academy of Sciences, 
universities, and other institutions successfully fill the gap left by 
the removal of the OTA, with respect to climate change?
    Answer. Please see remarks above in answer to part 1 of your 
question. Basically yes, I argued.

    Question 4. Do you think the lack of scientific and technical 
expertise at the congressional level puts us at a disadvantage? How 
about at the international level?
    Answer. Yes, Senator Hollings, I worry about this, as a veteran of 
testimony before congress since 1976. I find many staffers dedicated 
and honest, but too easily persuaded by less-than objective but 
credible-sounding unsound scientific arguments of special interest 
PhDs. This is a very difficult job to do--be highly literate in the 
subtleties of complex issues like climate change--but if our leaders 
are to make decisions commensurate with their values--those of the 
public that elected them--then it is imperative that those in the 
process of decisionmaking know enough about what the potential 
consequences and probabilities are of various policies, so they can 
make the trade-offs between investing present resources as a hedge 
against potential future risks or not. So a greater number of staff 
that can be more discerning about who is credible and who is spinning 
would be helpful. At a minimum, some staff should be fully able to 
understand technical assessment reports of the National Research 
Council and IPCC to help members fathom these complex issues. So yes, I 
think a few more specialists in understanding complex system scientific 
issues in the Congress would aid the process of putting decision making 
on a firmer scientific foundation.
    As to international disadvantages, I don't see more knowledgeable 
government scientists or policy analysts in European or Australian 
institutions than here, but perhaps there is better communication 
between parliamentarians and the technically competent governmental and 
academic worlds in Europe than in the U.S., where so much of the 
Congressional debate is highly polarized. and frankly, as I said above. 
not very reflective of the debates the scientist have--the public 
debate being captured by extreme special interest views in the U.S. to 
a degree far exceeding what I observe in Europe.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. John F. Kerry to 
                          Dr. Tom M.L. Wigley
Level of Scientific Justification for Action
    The Climate Action Report states: ``Greenhouse gases are 
accumulating in Earth's atmosphere as a result of human activities, 
causing global mean surface air temperature and subsurface ocean 
temperature to rise''. It also states: ``the best scientific 
information indicates that if greenhouse gas concentration continue to 
increase, changes are likely to occur''.
    We also are already seeing the effects of climate change, according 
to recent studies shrinking ice sheets, shifts in species ranges, and 
loss of snow covet on Mt. Kilimanjaro -to name only a few of many 
examples of the frightening consequences of climate change.

    Question 1. Do we not have sufficient conclusions and studies to 
justify some level of mandatory reductions in greenhouse gases?

    Question 1a. If not, why not?

    Question 1b. What additional evidence--short of flooding of the 
National Mall--must we gain to have sufficient justification for 
mandatory reductions in greenhouse gas emissions?
    Answer. We need to separate out two aspects of this question. 
First, science can provide the ``what ifs''--what if we do not have 
enforceable incentives to cut greenhouse gas emissions. by how much 
will concentrations rise and what might that imply for impacts on 
environment and society. In other words, science assesses the risks of 
alternative policies. Second. is the value laden political exercise of 
deciding how much risk should we take before trying to hedge against 
potentially ham1ful or irreversible prospects. Science can--and has--
told us that climate change beyond a few degrees further warming will 
have a much greater likelihood of dangerous outcomes than keeping it 
below a few degrees. The latter is much less likely to happen without 
climate policies like the McCain-Lieberman bill than with climate 
policies. Thus, the value choice is whether to hedge--i.e., adopt a 
precautionary principle to hedge against dangerous possibilities, whose 
severity increases with delay in dealing with the problem. That is the 
risk-management gamble 1we take if we ignore the problem and hope it 
will turn out on the low side of the current uncertainty range. Of 
course, if our luck--in truth, the luck of our children and 
grandchildren and nature--is bad, we will have much greater damages by 
doing nothing than by hedging.
    However, sensible policies also solve more than one problem at 
once. So cutting greenhouse emissions via more efficient or renewable 
systems reduces health-damaging air pollution in cities, and can reduce 
dangerous dependence on foreign supplies of oil. Such ``win-win'' 
strategies are usually the cheapest and most politically acceptable 
hedging strategies, and in my personal opinion we knew enough science--
a better than even chance for serious climate damages from business-as-
usual--that we should have Implemented climate policies 15 years ago 
(as I said to this committee in testimony in 1989 and again this 
month--see my written testimony on Oct. 1, 2003, for references).
    In terms of how much shock it will take to wake us up, the 1988 
heat waves were the first such shock, and moved this problem from a 
largely academic setting to congressional hearing rooms and media 
programs. Since then a contentions and too often special interest 
driven polemical debate has arisen, pitting ``end of the world'' 
pessimism versus ``CO2 is good for the environment'' 
optimism--the former from ``deep ecology'' groups and the latter from 
the fossil fuel industry and their ideological supporters. This debate 
has confused many, as it is technical and shrill. But the vast bulk of 
the knowledgeable scientific community that specializes in climatology 
has agreed over the past 10 years that effects of human activities are 
already discernible in the observational record, that plants and animal 
are already responding and will be greatly disturbed if the trends 
continue for decades more, and that cost effective solutions need not 
cost more than a year's delay in achieving phenomenal income growth--
hundreds of percent improvement--and can eliminate the global warming 
risk (see the discussion in my testimony to this committee on Oct. 1, 
2003). Thus, in my personal view we have had many clear signs of 
potential trouble and to risk more and greater threats seems foolish in 
view of the available cost-effective steps that can be taken now to 
lower the threat and provide co-benefits such as greater energy 
independence and reduced air pollution.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. John F. Kerry to 
                              Jos Delbeke
State Carbon Cap Programs & Federal Coordination
    As you may know, the state of Massachusetts was the first state to 
initiate a mandatory cap on CO2 emissions from its six 
highest-emitting power plants, and plans to reduce their emissions 
further. In addition, Oregon has placed CO2 limits on new 
power plants.

    Question 1. Given the potential for a patchwork of state carbon cap 
and trade programs, what role could the Federal Government play?
    Answer. This question reminds me very much of the situation we have 
been faced with in Europe a few years ago. We have witnessed two out of 
15 Member States establishing national greenhouse gas trading 
programs--Denmark in 2001 and the United Kingdom in 2002. It was 
striking to see how different these national schemes turned out to be 
designed. In order to prevent such a patchwork of national trading 
schemes developing against the backdrop of the EU common market the 
Commission has taken the initiative and proposed a Directive in order 
to coordinate or harmonise the most crucial choices at European level 
while leaving other choices to the discretion of Member States. I see 
therefore the role of the Federal Government in ensuring that crucial 
program design variables are coordinated or harmonized.

    Question 2. What roles are particularly appropriate for the states?
    Answer. In the EU scheme the Member States' roles are quite far-
reaching when it comes to implementation and administration of the 
scheme. Member States decide on initial allocation of allowances (both 
the total quantity of allowances to allocate and the distribution 
between covered installations), build and maintain the electronic 
allowance registries, check for compliance and levy financial penalties 
for non-compliance. It could imagine that a similar sharing of tasks 
could be appropriate in the U.S. context.

    Answer 3. What would be useful to see in such a system--consistent 
national criteria, standards, information coordination?
    Answer. I believe all the elements mentioned in the question would 
be useful. The approach we are taking in Europe contains all these 
elements together with the approach to periodically review what the 
best arrangements are to run the scheme. The experience collected in 
implementation may well make us decide to adapt the mix of these 
elements over time.

    Question 4. What is a good model for such a coordinated state-
national system?
    Answer. The most appropriate model of state and national action 
depends on the institutional circumstances. The European Union is a 
unique construct and the sharing of tasks in our scheme are very much a 
reflection of the institutional structure. One of the major differences 
I see between EU and the U.S. in this context is the absence of 
greenhouse gas emission targets in the 50 U.S. states. In view of this 
an appropriate model for the U.S. would probably differ in foreseeing 
more of a Federal role with regards to initial allocation. As far as 
the maintenance of allowance registries is concerned, it may be 
preferable to consider this as a Federal function in the US.
Cost to Business of Emissions Reductions
    One of the rationales given by the Bush Administration for 
rejecting any measures to require actual reductions in greenhouse gas 
emissions is that these will result in enormous costs to the U.S. 
economy, to the point that no mandatory requirements are acceptable. 
CEQ Chairman James Connaughton's testimony in a previous hearing stated 
that compliance with Kyoto would cost the United States $400 billion 
and 4.9 million jobs.

    Question 5. Do you agree with this assessment?
    Answer. Many economic assessments of implementing the Kyoto targets 
have been carried out over the year's since the adoption of the Kyoto 
Protocol. If the estimate is on an annual basis I have strong doubts 
about the figure, as this would imply that the cost would be about 5 
percent of annual economic output of the U.S. economy. The most 
authoritative overview of economic studies is the review undertaken by 
the IPCC for the Third Assessment Report which concluded that most cost 
estimates are in the range of 0.1 to 1.1 percent of GDP, assuming the 
use of the flexible mechanisms and 0.2 to 2 percent of GDP without 
their use.

    Question 6. Are you aware of any examples where requirements to 
address pollution either had little negative impact on the economy, or 
even provided areas for economic growth?
    Answer. I think there are many examples of environmental measures 
which have improved society's well-being. Both European and U.S. 
societies are characterized by quite a high level of environmental 
protection--when it comes to issues as air and water quality, waste 
management etc.--as well as by a high standard of living. If 
environmental policy would be to the detriment of economic development 
we should have become poorer after three decades of strong societal 
interest and advances in environmental policy.

    Question 7. Won't U.S. industries be at a disadvantage if other 
countries develop more environmentally efficient technologies?
    Answer. One of the pillars of European climate policy is the 
premise that the challenge represented by climate change will 
necessitate a movement to an increasingly carbon-constrained global 
economy over the coming decades. In such an economic environment 
efficient carbon management and the development and deployment of low-
carbon technologies will be among the key sources of competitive 
advantage. The earlier policy sets the right incentives for industries 
to start the transition to the low-carbon economy the smoother the 
transition process will turn out to be.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. John F. Kerry to 
                        Dr. Stephen H. Schneider
    Question 1. You were also highlighted by Senator Inhofe as being a 
critic of the Intergovernmental Panel on Climate Change (IPCC) results. 
Would you care to clarify your comments concerning the IPCC range of 
expected temperature increases over the next 100 years?
    Answer. A general comment first on Senator Inhofe's overall 
approach to discussing the climate issue, then I will specifically 
respond to the temperature increase issue you raise.
    It is indeed correct as the Senator suggests that I have criticized 
a few aspects of IPCC assessments, but then so too have nearly all 
scientists or policy analysts who honestly observe the complex issues 
involved. In fact, IPCC Lead Authors themselves are among the most 
vigorous critics of their own evolving assessment reports--as they 
should be. That is why IPCC assessments undergo several rounds of 
rigorous internal and external peer review--to maximize the likelihood 
of balanced assessment.
    However, criticizing pieces of a whole hardly constitutes 
disagreeing with the principal conclusions and the overarching 
credibility of most of the IPCC analyses. It is misrepresenting my 
views to characterize them as even implying that IPCC has exaggerated 
or failed to describe the state of the science fairly at the time the 
assessment reports were completed in 2000. In fact, work of my own (see 
Testimony of Stephen H. Schneider to Senate Commerce committee on Oct. 
1, 2003) or by the MIT group Senator Inhofe mentions, shows we all 
believe that IPCC may have underestimated the potential for large 
climate change by restricting itself to existing climate models 
available in 2000, and that several more recent papers (e.g., Andronova 
and Schlesinger, 2001 or Forest et al., 2001) show that climate may 
indeed be both more or less sensitive to greenhouse gas increases than 
IPCC could have known in 2000 when the Third Assessment was prepared. 
Thus, if anything, since the 2000 assessment--which may in fact be 
conservative in its conclusions--new research could as well increase 
the likelihood of higher warming as lower warming in 2100. Such is the 
nature of complex problems in which humans dump their wastes into the 
atmosphere at a faster rate than science can understand the 
consequences.
    In addition, to criticize the international scientific community 
for not providing ``a definitive scientific answer'' to the question of 
what constitutes ``dangerous'' global warming is to misunderstand the 
nature of sound science--in which it is rare to have ``definitive'' 
knowledge of any complex system (and to so claim would be dishonest, 
which IPCC did not do). For example, in his July 28, 2003 floor speech, 
Senator Inhofe says:

        According to the U.N.'s Intergovernmental Panel on Climate 
        Change, Kyoto will achieve ``stabilization of greenhouse gas 
        concentrations in the atmosphere at a level that would prevent 
        dangerous anthropogenic interference with the climate system.''

        What does this statement mean? The IPCC offers no elaboration 
        and doesn't provide any scientific explanation about what that 
        level would be. Why? The answer is simple: thus far no one has 
        found a definitive scientific answer. (Inhofe, 2003)

    This statement is erroneous in several aspects, and calls into 
question the credibility of the research apparatus Senator Inhofe 
relies upon to determine what is sound science. First of all, it was 
the UN Framework Convention on Climate Change (UNFCCC--see: http://
unfccc.int/), signed by President Bush (Sr.) and ratified by the U.S. 
Senate about 10 years ago, which stated the object of the Convention 
was to stabilize greenhouse gas concentrations so as ``to prevent 
dangerous anthropogenic interference . . .'' IPCC has steadfastly 
insisted that what is ``dangerous'' is a value judgment, not a 
scientific conclusion, so the Senator's quote that ``thus far no one 
has found a definitive scientific answer'' about what is ``dangerous'' 
is a contradiction in terms since it is not science, but policymakers, 
that must decide what constitutes a ``dangerous'' threat. The job of 
scientists--such as in IPCC or U.S. National Research Council 
assessments--is to discuss what consequences might occur at various 
greenhouse emissions levels and what is the likelihood and impacts of 
such potential consequences. That is responsible scientific assessment. 
The above quote is both incorrect in its assertion about what IPCC said 
about Kyoto and is not about science, let alone ``definitive'' science, 
an impossibility in principle about a complex problem assessing future 
possibilities.
Specific response on warming to 2100
    Senator Inhofe refers to my Commentary in Nature (Schneider, 2001), 
correctly noting that:

        In his article, Schneider asks, ``How likely is it that the 
        world will get 6 degrees C hotter by 2100?'' That, he said, 
        ``depends on the likelihood of the assumptions underlying the 
        projections.'' (Inhofe, 2003)

    The Senator continues:

        But as Schneider wrote, the group drafting the IPCC report 
        decided to express ``no preference'' for each temperature 
        scenario.

        In effect, this created the assumption that the higher bound of 
        5.8 degrees Celsius appeared to be just as likely as the lower 
        of 1.4 degrees Celsius. ``But this inference would be 
        incorrect,'' said Schneider, ``because uncertainties compound 
        through a series of modeling steps.''

        Keep in mind here that Schneider is on the side of the 
        alarmists. (Inhofe, 2003)

    This is an unfortunate mischaracterization of the context of my 
commentary, since it implies that IPCC has overestimated the likelihood 
of future temperature rises, when in fact they made no probability 
estimates--and I expressed a wish that they had tried, as difficult as 
that exercise would be. First of all, I praised the IPCC for have a 
wide range of possible emission scenarios--to honestly represent the 
divergence of possible futures that are reflected in the scientific and 
policy literature. Second, I also approved of the IPCC using several 
climate models to estimate the warming from each emission scenario, as 
using only one model would be misleading. However, the ``incorrect 
inference'' that Senator Inhofe quotes me saying was my concern about 
the assumption some analysts outside of the IPCC might make: namely, 
that if there was a uniform probability distribution implied over both 
emissions scenarios and climate sensitivity estimates, that some might 
misinterpret that as implying a uniform probability distribution of 
2100 temperature warming estimates. What I actually said was:

        The most typical assumption is a uniform probability 
        distribution across storylines (scenarios). This might seem to 
        imply a uniform probability distribution in an outcome that 
        really matters to policymakers: the likelihood of a given 
        temperature rise in 2100. But this inference would be 
        incorrect, because uncertainties compound through a series of 
        modeling steps. Uncertainties in emissions scenarios feed into 
        uncertainties in carbon-cycle modeling, which feed into 
        uncertainties in climate modeling, which drive an even larger 
        range of uncertain climate impacts. This ``cascade of 
        uncertainties'' (7) is compounded by the very wide range of 
        emissions offered by the SRES authors. (Schneider, 2001)

    In other words, I did not assert that IPCC overestimated anything, 
just that they put the burden on outsiders to estimate probabilities, 
and in my view the excellent expertise IPCC assembled should undertake 
the exercise in the next assessment. Moreover, I showed that under two 
differing sets of assumptions, there would be about a 20 percent or 40 
percent probability of 2,100 temperatures exceeding a large warming 
threshold (I used 3.5 +C to be conservative, though IPCC (2001) noted 
warming over 1.5 +C raises serious potential threats for some systems 
and regions). I said that such different probabilities imposed a burden 
for decision makers to interpret. I also said quite emphatically and 
explicitly that the probability distributions I showed in my Figure 1 
in that paper were simply illustrations of the potential for 
misinterpretations--I even put quotation marks around the word 
``frequency'' to be sure nobody misinterpreted the graph as being based 
on subjective probabilistic analysis, rather than being what is was: a 
demonstration of how it is too easy for there to be misinterpretations. 
This is what I actually said about that:

        The sensitivity of the likelihood of threshold crossing 
        occurrences is thus quite sensitive to the particular selection 
        of scenarios and climate sensitivities used. Arbitrary 
        selection of scenarios or sensitivities will produce 
        distributions that could easily be misinterpreted as containing 
        subjective probabilistic analysis when in fact they do not--
        until judgments are formally made about the likelihood of each 
        scenario or sensitivity. For this reason the word ``frequency'' 
        appears with quotation marks on Figure 1, as it is not a 
        justifiable probability distribution given that the 
        subcomponents are arbitrarily chosen without a ``traceable 
        account'' (Moss and Schneider, 2000) of the logic of the 
        selection process. (Schneider, 2001)

    I concluded my commentary in Nature by expressing my concern:

        The special report leadership was not wrong, of course, about 
        how difficult it would be to attempt to assign subjective 
        probabilities to radically different visions of the future. 
        However, in the probability vacuum that followed its assertion 
        that all scenarios were ``equally sound'', we are facing the 
        even more worrying prospect of dozens of users selecting 
        arbitrary scenarios and climate-model sensitivities to 
        construct frequency charts that purport to enlighten 
        policymakers on the likelihood of ``dangerous'' warming. In the 
        risk-management dilemma that constitutes climate change 
        policymaking, I would definitely put more trust in the 
        admittedly subjective probability estimates of the SRES team 
        than the myriad special interests that have been encouraged to 
        make their own selection. Meanwhile, while we wait for IPCC to 
        decide whether to reassemble the team for this controversial 
        labor, climate policymakers and advisers will have to be 
        vigilant, asking all advisors to justify the threshold they 
        choose for predicting ``dangerous'' climate change, as well as 
        to provide a ``traceable'' account (Moss and Schneider, 2000) 
        of the basis of their selection of emissions scenarios and 
        climate-model sensitivities, as these jointly determine the 
        probability of future risks. (Schneider, 2001)

    Thus, Senator Inhofe's interpretation that ``Schneider's own 
calculations, which cast serious doubt on the IPCC's extreme 
prediction'', is not a proper characterization of my intent or 
analysis. In fact, I specifically argue in a number of places 
(summarized in my Oct. 1, 2003 Testimony to the Senate Commerce 
Committee) that the sword of uncertainty cuts two ways: IPCC is as 
likely to have underestimated the likelihood of climate change crossing 
dangerous thresholds as having overestimated it, and that a better 
characterization of probabilities would be a useful exercise for the 
next IPCC assessment.
    Finally, I fail to see how my very conservative approach to 
characterizing openly the uncertainties of climate projections--and my 
advice on how to improve the situation published in highly visible 
journals (like Nature)--could possible be characterized fairly by 
anyone as ``Schneider is on the side of the alarmists'' or is ``an 
outspoken believer in catastrophic global warming'', the ad hominem 
assertions of Senator Inhofe. I am indeed an ``outspoken believer'' 
that both mild or catastrophic global warming outcomes remain 
plausible. That is why I advocate the use of more probabilistic 
formulations of the potential risks (e.g., Schneider, 2001) and 
consideration by the policy communities of possible hedging strategies 
against the more serious possibilities--just like most business, 
medical or military assessment groups would do when they face deep 
uncertainties and an uncomfortable chance of potentially risky 
outcomes.

    Question 2. You mentioned in your statement the next area of 
research is climate sensitivity probabilities. You also mentioned that 
MIT has started work in this area. Can you explain the importance of 
this area of research? Today, we get the weather forecast in terms of 
probabilities. Is this an attempt to get climate data in the same 
format?
    Answer. As noted in my answer to question 1 above, one important 
question policy makers ask of climate scientists is by how much might 
it warm up at some future time given various levels of greenhouse gas 
concentrations--precisely the question posed in the UNFCCC ``dangerous 
interference'' quote. At least two factors contribute greatly to 
uncertainties over the amount of warming projected: scenarios of 
greenhouse gas emissions and the climate sensitivity (i.e., by how much 
the temperature will rise given a fixed--usually doubling--increase in 
the concentration of CO2). Up to about 2000, most 
assessments tried to bracket uncertainties in these factors by 
providing scenarios of emissions and ranges of climate sensitivity. 
That is what led IPCC to give its well-cited 1.4-5.8 +C temperature 
increase range for 2100. Several authors/groups have argued that more 
than ranges are needed for helping policy makers, since the likelihood 
of any particular warming is also necessary to make informed risk-
management decisions. Thus, a probabilistic analysis is desirable, if 
possible, to produce credible risk assessments. Several early attempts 
have been made since the IPCC Third Assessment in 2000. These include: 
Wigley and Raper, 2001, Schneider, 2001 and recently Webster et al., 
2003.
    An important part of the attempt to provide probabilistic 
assessments is estimation of climate sensitivity as a probability 
distribution. Recently, several groups have attempted to derive such 
distributions, by matching the range of emissions of greenhouse gasses 
and aerosols and comparing them to the actual temperature rises over 
the past 50 years. Such attempts to scale climate sensitivity by actual 
observed temperature changes has resulted in a substantial expansion in 
the range of climate sensitivity from most previous assessments. Up to 
2000, it was typically believed the most likely range for climate 
sensitivity was 1.5 to 4.5 +C warming for a doubling of CO2. 
Now, two studies, for example, Andronova and Schlesinger, 2001 (from 
the University of Illinois at Champagne-Urbana) and Forest et al., 2001 
(from MIT) derive climate sensitivities well above and below the 
heretofore ``canonical'' range of 1.5-4.5 +C. That is why I said in my 
formal testimony to the Commerce Committee on Oct. 1, 2003 (and in 
answering question 1 above), that recent analyses have actually 
expanded uncertainty, not reduced it, for the climate sensitivity 
assessment. Of course, eventually more research will narrow 
uncertainties, but at the moment we face an even larger range of 
potential warming outcomes and thus the probability of exceeding 
thresholds that some might consider ``dangerous'' has actually gone up, 
not down since the Third Assessment Report.
    The Webster et al. 2003 work (from MIT) has tried to incorporate 
several major uncertainties via probability distributions and produced, 
like Schneider, 2001 and Wigley and Raper, 2001, a probability 
distribution for warming in 2100, that essentially encompasses the IPCC 
range, but shows the possibility of both greater than 5.8 +C or less 
than 1.4 +C warming. I believe that this new approach--expressing the 
important elements of projected climate change in probabilistic terms--
will become the method of choice for the research community over the 
next decade. Early results still show a very wide distribution, but 
hopefully over the next two decades uncertainties can be substantially 
narrowed. Of course, whether the now-expanded possibility for warming 
over several degrees should motivate policy actions--what I personally 
believe constitutes a sound hedging strategy--is the value judgment 
policy makers will be facing in the decades ahead. Hopefully, the new 
probabilistic presentations will put risk management judgments on a 
firmer scientific basis.
References
    Andronova, N.G. and M.E. Schlesinger, 2001: ``Objective Estimation 
of the Probability Density Function for Climate Sensitivity'', Journal 
of Geophysical Research 106:22605-22612.

    Forest, C.E., P.H. Stone, A.P. Sokolov, M.R. Allen, and M.D. 
Webster, 2001: ``Quantifying Uncertainties in Climate System Properties 
Using Recent Climate Observations'', Science 295(5552):113-117.

    Inhofe, J.M. (2003). THE SCIENCE OF CLIMATE CHANGE Senate Floor 
Statement by U.S. Sen. James M. Inhofe (R-Okla) CHAIRMAN, COMMITTEE ON 
ENVIRONMENT AND PUBLIC WORKS July 28, 2003.

    IPCC, 2001: Impacts, Adaptation, and Vulnerability--Contribution of 
Working Group II to the IPCC Third Assessment Report, [J.J. McCarthy, 
O.F. Canziani, N.A. Leary, D.J. Dokken, K.S. White (eds.)] (Cambridge: 
Cambridge University Press), 1032 pp.

    Moss, R.H. and S.H. Schneider, 2000: ``Uncertainties in the IPCC 
TAR: Recommendations to Lead Authors for More Consistent Assessment and 
Reporting'', in Pachauri R., T. Taniguchi, and K. Tanaka (eds.), 
Guidance Papers on the Cross Cutting Issues of the Third Assessment 
Report of the IPCC (Geneva, Switzerland: World Meteorological 
Organization), 33-51.

    Schneider, S.H., 2001: What is ``Dangerous'' Climate Change? 
Nature, 411, 17-19.

    Schneider, S.H., 2003: U.S. Senate Committee on Commerce, Science, 
and Transportation Hearing on ``The Case for Climate Change Action'' 
October 1, 2003.

    Webster, M., et al.: ``Uncertainty Analysis of Climate Change and 
Policy Response'', Climatic Change, in press.

    Wigley, T.M.L. and S.C.B. Raper, 2001: ``Interpretation of High 
Projections for Global-mean Warming, Science, 293:451-454.
Voluntary Approach and UNFCC
    As you know, the U.S. signed and ratified the UN Framework 
Convention on Climate Change in 1992, which set as its goal 
``stabilization of greenhouse gas concentrations in the atmosphere at a 
level that would prevent dangerous anthropogenic interference with the 
climate system.`` 
    The UNFCC further stated that ``such a level should be achieved 
within a time frame sufficient to allow ecosystems to adapt naturally 
to climate change . . .''.
    But according to testimony before this Committee in July of last 
year and the U.S. Climate Action Report, U.S. greenhouse gas emissions 
will increase under the Bush plan by 43 percent between 2000-2020, 
despite improvements in greenhouse gas intensity.

    Question 3. Is the ``emissions intensity'' voluntary approach to 
greenhouse gas emission reductions currently advocated by the 
Administration is sufficient to put us on track to achieve greenhouse 
gas stabilization in a timely manner?

    Question 3a. If we continue on the current path--with emissions 
rising annually when would we achieve this goal? Ever?

    Question 3b. Can actual emissions reductions on such scale and 
time-frame be achieved solely through any type of voluntary action?
    Answer. In short, Senator Kerry, the answers to all three questions 
above are ``No''. But I will explain briefly why in each case.
    First, to emissions intensity, a measure of the emissions of 
greenhouse gasses per unit economic product (GDP). There are three 
factors that can reduce (i.e., improve) intensity: 1--more efficient 
energy supply and end uses; 2--a transformation of the economy away 
from materials and energy intensive activities to more service/
information based activities (e.g., moving logs around in diesel trucks 
is much more energy intensive per unit economic product produced than 
moving electrons around in the microchips of computers); 3--a switch 
from high carbon emitting energy sources like coal burning to less 
emitting sources like natural gas burning, or even less emitting energy 
systems like renewables or deep earth sequestration of CO2. 
(produced by a closed cycle fossil fuel plant that produced hydrogen as 
the energy carrier and buried the CO2 underground). The 
latter will take financial incentives to produce the necessary RD 
investments, and this bill will certainly provide such incentives.
    The problem with the President's plan is that he promised to 
accomplish what will happen anyway without his intervention--that is, 
for the transformation of the economy to a more efficient, more 
infom1ation based entity. In fact. the emissions intensity improvement 
he proposes as his climate ``plan'' are about what historic levels of 
emissions intensity have been from the natural evolution of the 
economy--in other words, little value added to the emissions profile we 
would get with no plan.
    More importantly, emissions intensity is only a part of emissions. 
Emissions are the product of population size, times affluence (GDP/
capita) times emissions intensity. Since the GDP and population sizes 
are projected to go up dramatically in the next few decades by the 
Administration's own figures, then the total emissions will go up too, 
even with a decrease in emissions intensity offsetting some of the 
increase, but by no means all. In other words, the Administration 
''plan'' is an emissions increase plan, whereas the McCain-Lieberman 
bill is a true emissions reduction plan, and its passage would send 
signals to the very able technologists in the U.S. to work harder on 
development of lower priced. low-carbon-emitting energy systems and 
accelerated emissions intensity improvements well beyond those that 
would be achieved by passive--i.e., no action-policies like that the 
U.S. is now advocating.
    Greenhouse gas stabilization. Stabilization of greenhouse gasses 
requires not only reductions of emission, but also eventual reductions 
to near zero. How long we take to get there and how much we emit in the 
interim detem1ines the ultimate stabilization levels. Most scenarios of 
emissions project a doubling of CO2 over pre-industrial 
levels sometime in the mid-21st century if we follow a ''business-as-
usual'' policy of no required reductions, and a possible tripling or 
more of CO2 concentrations by the end of the century--
threatening climatic impacts that are truly catastrophic in their 
potential. In order to ``merely'' double CO2, we need to cut 
emission by about half below typical business-as-usual projections in 
the next five decades and to near zero by century's end. Anything less 
is likely to produce more than a doubling of CO2 by the time 
it stabilizes. Doing nothing just ups the final stabilization levels 
once society finally decides to prevent further warming.
    Can voluntary action work? I must admit I am very skeptical about 
voluntary actions that have no private and immediate gains. It is the 
same to ask a company to cut its bottom line for the good of the planet 
without fair rules to require it in general as it is to ask motorists 
to obey speed limits and traffic lights on a voluntary basis without 
police enforcement. It simply is unrealistic to expect compliance or 
enhancement of R&D on efficient and lower cost decarbonized energy 
systems without incentives. and the pleading of politicians is a very 
unlikely incentive for most cost-conscious businesses. It is necessary 
in my personal opinion, to charge for the dumping of wastes into the 
atmosphere, just as it is a well-accepted principle to charge for 
dumping of solid wastes in municipal landfills. The ``free sewer'' that 
the air has become cannot be cleaned up without rules--just like it 
took rules to clean some of the criteria air pollutants from many of 
our cities and some of the acid rain from many of our industries. The 
McCain-Lieberman bill does this for greenhouse gases, and thus is a 
step in the right direction.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. John F. Kerry to 
                            Ethan J. Podell
Voluntary Approach and UNFCC
    As you know, the U.S. signed and ratified the UN Framework 
Convention on Climate Change in 1992, which set as its goal 
``stabilization of greenhouse gas concentrations in the atmosphere at a 
level that would prevent dangerous anthropogenic interference with the 
climate system.''
    The UNFCC further stated that ``such a level should be achieved 
within a time frame sufficient to allow ecosystems to adapt naturally 
to climate change. . . .''
    But according to testimony before this Committee in July of last 
year and the U.S. Climate Action Report, U.S. greenhouse gas emissions 
will increase under the Bush plan by 43 percent between 2000-2020, 
despite improvements in greenhouse gas intensity.

    Question 1. Is the ``emissions intensity'' voluntary approach to 
greenhouse gas emission reductions currently advocated by the 
Administration is sufficient to put us on track to achieve greenhouse 
gas stabilization in a timely manner?
    Answer. An ``emissions intensity'' approach will not reduce the 
total level of GHG emissions, which is the key problem to address. If a 
person is trying to lose weight, what counts is the number indicated on 
the scale, not the ratio of fat content to each gram of food consumed.

    Question 1a. If we continue on the current path--with emissions 
rising annually--when would we achieve this goal? Ever?
    Answer. I do not believe there is any way that an intensity-
standard will ever be useful in reducing what is now already a 
dangerous level of GHG concentrations in the atmosphere.

    Question 1b. Can actual emissions reductions on such scale and 
time-frame be achieved solely through any type of voluntary action?
    Answer. The evidence we have so far from the marketplace is that a 
voluntary system can not achieve any meaningful reductions in GHG 
emissions in the U.S.
State Carbon Cap Programs & Federal Coordination
    Question 2. As you may know, the state of Massachusetts was the 
first state to initiate a mandatory cap on CO2 emissions 
from its six highest-emitting power plants, and plans to reduce their 
emissions further. In addition, Oregon has placed CO2 limits 
on new power plants. Given the potential for a patchwork of state 
carbon cap and trade programs, what role could the Federal government 
play?
    Answer. A proliferation of state GHG reduction programs has the 
very real potential for increasing costs and adding confusion. The most 
efficient approach is to create a Federal standard along the lines of 
the SO2 trading program established by the 1990 amendments 
to the Clean Air Act.

    Question 3. What roles are particularly appropriate for the states?
    Answer. Climate change is truly a global problem. At the very least 
it is a national problem requiring a Federal policy. Congress should 
adopt a mandatory GHG cap-and-trade system. We complicate and Balkanize 
the task by allowing the states to design multiple systems. The states 
have taken the lead on climate change, given the absence of leadership 
from Washington on this issue. I would hope that what state action 
leads to here eventually is a Federal cap and trade program for GHG. 
The states can be helpful to catalyze this process but I don't think a 
plethora of state GHG reduction plans by themselves are going to prove 
very effective.

    Question 4. What would be useful to see in such a system--
consistent national criteria, standards, information coordination?

    Question 5. What is a good model for such a coordinated state-
national system?
Cost to Business of Emissions Reductions
    Question 6. One of the rationales given by the Bush Administration 
for rejecting any measures to require actual reductions in greenhouse 
gas emissions is that these will result in enormous costs to the U.S. 
economy, to the point that no mandatory requirements are acceptable. 
CEQ Chairman James Connaughton's testimony in a previous hearing stated 
that compliance with Kyoto would cost the United States $400 billion 
and 4.9 million jobs. Do you agree with this assessment?
    Answer. There will in the short run be some costs to the economy to 
reduce GHG emissions, but there will also be short run cost savings 
from energy efficiency and conservation. Over a somewhat longer time 
frame (5 years from implementation), there is reason to believe that a 
mandatory GHG cap-and-trade program will lead to reduced energy costs 
across the economy.

    Question 7. Are you aware of any examples where requirements to 
address pollution either had little negative impact on the economy, or 
even provided areas for economic growth?
    Answer. There are any number of examples here. First, look 
carefully at the ramifications of the SO2 trading program 
over the past 8 years. Second, look at the growth in sales in the U.S. 
of the Toyota Prius, a hybrid gas/electric vehicle. Sales have gone 
from 1,500 vehicles per year to nearly 50,000 vehicles per year in a 
matter of a few years. In a larger sense, reducing GHG emisssions is 
another way of accomplishing greater energy efficiencies. Energy 
efficiency is a real business and a growth business. By enacting 
legislation such as S. 139 not only will Congress engage the United 
States in climate change mitigation, but we will lend support to many 
businesses and emerging technologies focused on energy efficiency 
solutions.

    Question 8. Won't U.S. industries be at a disadvantage if other 
countries develop more environmentally efficient technologies?
    Answer. We absolutely will be at such a disadvantage. There is a 
very compelling case to be made for how energy efficient technologies 
are likely to be one of the real worldwide growth businesses of the 
next decade. As a policy objective, the U.S. Government should take an 
active role in promoting those American businesses which are engaged in 
this sector. Europe and Japan are already ahead of us in many respects 
in developing businesses and technologies which address energy 
efficiency opportunities. Washington needs to engage on this issue, and 
do it quickly.
Economic Effects of Greenhouse Gas Limits
    Question 9. If U.S. companies take steps to reduce greenhouse gas 
emissions, will it help them compete in the international marketplace?

    Question 10. Given our experience in the SO2 cap and 
trade program, and the growing interest in international trading, what 
is the likely effect on the U.S. economy of capping and trading 
greenhouse gas emissions?

    Question 11. From your knowledge of international efforts, how have 
other countries benefited from carrying out greenhouse gas reduction 
strategies similar to the ones you have outlined here?
                                 ______
                                 
   Response to Written Questions Submitted by Hon. John F. Kerry to 
                           John B. Stephenson
State Carbon Cap Programs and Federal Coordination
    Question 1. As you may know, the state of Massachusetts was the 
first state to initiate a mandatory cap on CO2 emissions 
from its six highest-emitting power plants, and plans to reduce their 
emissions further. In addition, Oregon has placed CO2 limits 
on new power plants.

   Given the potential for a patchwork of state carbon cap and 
        trade programs, what role could the Federal Government play?

   What roles are particularly appropriate for the states?

   What would be useful to see in such a system--consistent 
        national criteria, standards, information coordination?

   What is a good model for such a coordinated state-national 
        system?

    Answer. There are advantages and disadvantages to state-focused and 
federal-focused efforts to reduce greenhouse gas emissions. Four 
arguments in favor of a uniform national regulatory standard for 
dealing with an environmental or other problem with widely dispersed 
effects may be cited. (1) The broader the scope of a cap-and-trade 
program (in terms of the number of firms, the geographic scope, and so 
forth), the more cost-effective that program is expected to be. (2) 
Inconsistent state regulations can raise the costs of firms that 
conduct business in more than one state because they would need to 
comply with different states' standards. (3) The existence of 
inconsistent state regulations may somewhat affect states' 
attractiveness to business, possibly leading firms to relocate from a 
state with more stringent regulations to a state with less stringent 
regulations or, at a minimum, to expand more in a state with less 
stringent regulations than in a state with more stringent regulations. 
(Note that the state vs. Federal issues may also apply at the national 
vs. international level.) (4) Large-scale greenhouse gas emissions 
reductions will be necessary to have an impact on the atmosphere. If a 
significant share of U.S. sources were not involved in making 
reductions, the environmental impact would be weakened.
    On the other hand, there are also arguments in favor of state-
focused regulation. (1) Different states may have different perceptions 
of an environmental threat and may have different inclinations to deal 
with the threat. A state that views climate change as a serious threat 
can take action by itself without having to wait for the sort of 
consensus needed for Federal regulation. (2) Even among states with a 
consistent assessment of a threat, different states may have different 
traditions about how to deal with a threat, for example, how much 
regulation is appropriate, which regulatory tools are most appropriate, 
and whether regulations should operate at the county or state level. 
(3) Some states may view carbon dioxide control as also having local 
health benefits that would differ by location. That is, controls on 
carbon dioxide could lead to lower emissions of other byproducts of 
burning fossil fuels, such as nitrogen oxides, sulfur dioxide, and 
particulate matter, which can harm human health. (4) Commitments by 
states may influence future actions by producers or other states. For 
example, if a particular state adopts a regulation to control 
greenhouse gas emissions, this action may induce other states to follow 
suit, because manufacturers would find that it is less expensive to 
build one type of energy-consuming device than to configure different 
models for sale in different states.
    The Federal Government is primarily responsible for efforts to deal 
with any transboundary effects of pollutants. We are not aware of any 
international environmental issue that involves a significant state 
role.
Voluntary Approaches and the U.N. Framework Convention on Climate 
        Change
    Question 2. As you know, the United States signed and ratified the 
United Nations Framework Convention on Climate Change, which set as its 
goal ``stabilization of greenhouse gas concentrations in the atmosphere 
at a level that would prevent dangerous anthropogenic interference with 
the climate system.'' The Framework Convention further stated that, 
``such a level should be achieved within a time frame sufficient to 
allow ecosystems to adapt naturally to climate change. . . .''
    But, according to testimony before this Committee in July of last 
year and the U.S. Climate Action Report, U.S. greenhouse gas emissions 
will increase under the Bush plan by 43 percent between 2000-2020, 
despite improvements in greenhouse gas intensity.

   Is the ``emissions intensity'' voluntary approach to 
        greenhouse gas emission reductions currently advocated by the 
        Administration sufficient to put us on track to achieve 
        greenhouse gas stabilization in a timely manner?

   If we continue on the current path--with emissions rising 
        annually--when would we achieve this goal? Ever?

   Can actual emissions reductions on such scale and time-frame 
        be achieved solely through any type of voluntary action?

    Answer. While the United States is the world's largest emitter of 
greenhouse gases, stabilizing atmospheric concentrations depends on 
more than U.S. emissions trends. It may be useful to consider U.S. 
emissions trends and concentrations separately.
    U.S. emissions are projected to increase 43 percent, and intensity 
is projected to decrease 30 percent through 2025, according to the 
Energy Information Administration's (EIA) baseline projections. (Under 
the President's February 2002 climate initiative, which runs through 
2012, intensity would decrease more and emissions would increase less 
than in these baseline projections.) As a general matter, stabilizing 
U.S. emissions would require that the average annual increase in GDP 
and the average annual decrease in intensity be roughly equal. Because 
EIA projects that GDP will increase 3 percent a year through 2025, a 
similar rate of decrease in intensity would be required to 
counterbalance it. However, such a rate would be substantially higher 
than in the recent past (2.1 percent a year between 1980 and 2000) and 
in the baseline forecast for the next two decades (1.5 percent a year 
between 2001 and 2025).
    Stabilizing atmospheric concentrations of greenhouse gases would 
involve both the United States, currently the world's biggest emitter, 
and the other nations of the world. In 2001, the United States 
accounted for about 24 percent of the world's carbon dioxide emissions, 
according to EIA, and it is expected to account for about 22 percent in 
2025; the U.S. share is declining because emissions in the rest of the 
world are increasing faster than U.S. emissions. Thus, stabilizing U.S. 
emissions would not be sufficient to stabilize atmospheric 
concentrations. That would require stabilizing worldwide emissions, a 
less likely prospect. Moreover, because greenhouse gases have long 
lifetimes, atmospheric concentrations would not stabilize until decades 
after worldwide emissions are stabilized.
    According to Dr. John Reilly, Associate Director for Research in 
the Joint Program on the Science and Policy of Global Change at MIT, 
the 18-percent reduction in U.S. emissions intensity envisioned by the 
President's climate initiative would not have a measurable effect on 
atmospheric concentrations in 2012, owing to the short timeframe. (This 
18-percent includes the 14-percent reduction expected to occur anyway, 
plus the additional 4-percent reduction under the President's climate 
initiative.) However, he said that--under certain conditions--this 
approach could have an effect. The conditions are that (1) the 
initiative be extended over many years and (2) other major emitting 
countries attain similar goals.
    The effectiveness of voluntary programs in stabilizing greenhouse 
gas emissions in the relatively near-term would depend on various 
factors. These would include: (1) the extent to which emitters, 
including private individuals and firms, believe that climate change--
or the threat of potential regulation--is urgent and that they can help 
address that threat by reducing their emissions and (2) the costs they 
would bear for reducing their emissions.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. John F. Kerry to 
                           Christopher Walker
Delay of Action and Costs to Society
    Despite the President's declaration to cut U.S. green house gas 
intensity by 18 percent in the next ten years, we have heard in 
previous testimony from Mr. James Connaughton, head of CEQ, that his 
proposal will result in steadily increasing GHG emissions.

    Question 1. Speaking as a scientist, doesn't each decade that we 
delay in reducing greenhouse gas emissions commit us to enduring 
greater warming in the future and make it exceedingly difficult to 
stabilize atmospheric GHG concentrations?

    Question 1a. Doesn't this mean that either mitigation or adaptation 
will come at a much greater cost to society in the future?
    Answer. The answer to both questions is ``yes'', and I elaborated 
on them in answering the above questions, so will not repeat that here. 
But let me make one distinction here I did not make above. We must 
distinguish between policies that cause immediate abatement and 
policies that invest in the means to make abatement cheaper in the 
future. While I believe there are opportunities to implement immediate 
abatement actions at low costs--plugging inefficiencies and reducing 
air pollution at the same time is already a good economic policy--the 
bulk of the abatement of CO2 relative to most business-as-
usual projections will be in the decades ahead as new discoveries and 
learning-by-doing lowers the price of substituting current polluting 
systems with cleaner less emitting alternatives. But, and here is the 
point, such low-carbon-emitting systems will not invent themselves, 
will not create a better learning curve if we do not immediately invest 
in research, development and early deployment to learn how to do it 
better and cheaper at a massive scale later on. Doing nothing is the 
worst policy, but we should not expect to have a major cut in emissions 
instantly, as that will take some time and effort to bring about in the 
most cost effective manner. But, incentives to foster that investment 
in discovery and efficiency should have been in place two decades ago--
we'd have the fruits of it now had we been more farsighted--but to 
delay and do little will only increase costs over time and increase 
risks of large and potentially dangerous climate changes in the decades 
ahead.

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